Mirabela Nickel Limited - Quarterly Activity Report for the Period Ended 31 December 2012

PERTH, Australia, Jan. 22, 2013 /CNW/ - Mirabela Nickel Limited ("Mirabela" or the "Company") (ASX: MBN, TSX: MNB) is pleased to announce its unaudited fourth quarter results for the period ended 31 December 2012.

HIGHLIGHTS

  • Full year production within guidance at 19,253 tonnes of nickel in concentrate
  • Production for the quarter of 5,291 tonnes of nickel in concentrate (Q3 2012: 5,441 tonnes)
  • Sales for the quarter of 5,044 tonnes of nickel in concentrate (Q3 2012: 5,381 tonnes)
  • Unit cash costs of US$4.91/lb for the quarter (Q3 2012: US$5.38/lb)
  • Average mined nickel grade of 0.55% for the quarter (Q3 2012: 0.52%) and total mining material movement of 8.8 million tonnes (Q3 2012: 8.9 million tonnes)
  • Processing plant throughput of 1.7 million tonnes (Q3 2012: 1.8 million tonnes)
  • Average processing plant nickel recovery of 59% (Q3 2012: 59%) and average nickel feed grade of 0.53% (Q3 2012: 0.52%) for the quarter
  • Cash on hand and on deposit of US$143 million at quarter end (Q3 2012: US$160 million)

OPERATIONS

Safety

Mirabela's strong safety performance continued with no lost time injuries during the quarter. The Company's safety performance remains strong with the 12 month moving average Lost Time Injury Frequency Rate closing the year at 0.69, improving from 0.82 at the end of Q3. The all injury frequency rate continued to fall and ended the year at 4.82 (Q3: 5.71). Mirabela is continuing to target further improvements to this strong safety record through ongoing safety training and safety improvement programmes.

Production Statistics

           
    Three months
ended
31 Dec 2012
Three months
ended
30 Sep 2012
% change
favourable/
(unfavourable)
Year to Date
2012
Mining          
Total Material Mined Tonnes 8,823,363 8,947,179 (1) 38,531,233
Ore Mined Tonnes 1,764,245 1,748,416 1 6,790,642
Nickel Grade % 0.55 0.52 6 0.50
           
Processing          
Total Ore Processed Tonnes 1,691,798 1,798,040 (6) 6,472,895
Nickel Grade % 0.53 0.52 2 0.51
Copper Grade % 0.13 0.13 - 0.13
Cobalt Grade % 0.02 0.01 100 0.01
Nickel Recovery % 59 59 - 58
Copper Recovery % 70 75 (7) 72
Cobalt Recovery % 34 36 (6) 35
           
Production          
Nickel in Concentrate DMT 5,291 5,441 (3) 19,253
Copper in Concentrate DMT 1,507 1,704 (12) 5,858
Cobalt in Concentrate DMT 91 96 (5) 335
           
Sales          
Nickel in Concentrate  (1) DMT 5,044 5,381 (6) 19,367
Copper in Concentrate  (1) DMT 1,454 1,780 (18) 6,253
Cobalt in Concentrate  (1) DMT 88 92 (4) 344
           

(1)     Includes sales volume adjustments upon finalisation of assays.

Mining

Total material movement for the quarter was 8.8 million tonnes of material moved for 1.8 million tonnes of ore. The material movement was at the low end of expectations due to restricted loader and excavator availabilities. The mine schedule was running approximately one month behind schedule at the end of the year. Mined grades improved from 0.52% during the third quarter to an average of 0.55% during the fourth quarter, in line with expectations.

Mining activity for the quarter continued to be predominantly in the Central zone, delivering 81% of the ore mined. The remaining ore was sourced from the South and North pit zones. Access to the better quality ore in the South pit has been restricted due to geotechnical instability in the temporary pit wall between the higher central zone and lower south zone. Remedial works are underway. Reconciliation between mined grades and the new resource model was on expectations for the quarter and the mine, plant and maintenance rolling six week schedule and plans remain fully integrated into the operational production cycle.

Loader and Excavator availabilities continue to remain the key mining focus area for operational improvement.  Two of the 120 tonne excavators were shut down for an extended period to assist in clearing a backlog of maintenance works on the machines. The third excavator is undergoing an extended shutdown during January 2013. Steady improvements in availability have been achieved post shutdown. Additional contractor excavator capability has been secured to assist in increasing material movement in the short term. The drilling and truck mobile fleets performed at expectations.

Processing

During the quarter 1.7 million tonnes of ore was milled, at an average head grade of 0.53% nickel and achieving an average recovery of 59%. The plant throughput was marginally lower than target due to the performance of the crushing circuit. The first crushing line is scheduled for major maintenance during the first half of 2013 with the new second crushing line performance improving during the quarter. Recovery performance remains in line with the grade recovery algorithm and the quality of ore feed to the plant.  The de-sliming plant was fully operational for most of the fourth quarter with a minor shut down due to mechanical adjustments slightly impacting on the recovery performance. De-sliming continues to stabilise operations, recoveries and product qualities, as well as reducing reagent dosage rates and consequently costs.

Recovery optimisation test work for the quarter included an industrial test of new reagents in the plant. Early results are indicating improved recoveries and concentrate quality. The new reagents regime has been introduced into the plant and optimization of the process is continuing. MgO levels in the ore feed continue to be the most significant limiting factor on processing plant recoveries. Further test work is being undertaken in the laboratory and pilot plant as part of the ongoing recovery improvement program.

During the quarter Mirabela produced 5,291 tonnes of contained nickel in concentrate, 1,507 tonnes of contained copper in concentrate, and 91 tonnes of contained cobalt in concentrate.  5,044 tonnes of nickel in concentrate was sold to Mirabela's off-take partners, Votorantim Metais Niquel S.A. and Norilsk Nickel. One export shipment to Norilsk Nickel was completed during the quarter with steady deliveries to Votorantim continuing.

Sales for 2012 were split 56% to Votorantim and 44% to Norilsk. Both customers work cooperatively with Mirabela to decide on the prioritisation of concentrate deliveries. With the agreed focus on Votorantim deliveries over the last three years it is expected that the Norilsk Nickel off-take will extend beyond the end of 2014. The current Votorantim off-take will finish at the end of 2014.

Exploration & Studies

Exploration activity for the quarter was focused on tenement maintenance only.

The Company has appointed expert consultants, Optiro and Lycopodium, to assist with its operational optimisation and expansion studies. The Company's current priority is continued optimisation and low capital, incremental expansion. As such, the 9Mt pre-feasibility study has been re-prioritised behind this work with the pre-feasibility study now expected to be completed late in 2013.

Unit Cash Costs

           
    Three months
ended
31 Dec 2012
Three months
ended
30 Sep 2012
% change
favourable/
(unfavourable)
Year to Date
2012
Payable Nickel Production(1) lbs 10,381,534 10,675,850 (3) 37,777,448
           
Production Costs          
Mining Cost US$/lb 2.41 2.90 17 3.00
Processing Costs US$/lb 1.37 1.34 (2) 1.61
Administration Cost US$/lb 0.48 0.43 (12) 0.53
Subtotal US$/lb 4.26 4.67 9 5.14
           
Selling Costs          
Transport/Shipping Cost US$/lb 0.14 0.20 30 0.19
By-Product Credit(2) US$/lb (0.91) (1.17) (22) (1.17)
Smelter Charges US$/lb 1.42 1.68 15 1.66
Subtotal US$/lb 0.65 0.71 8 0.68
           
C1 Unit Cash Cost US$/lb 4.91 5.38 9 5.82
Unit Royalty Cost US$/lb 0.37 0.35 (6) 0.39
Realised Nickel Price(2) US$/lb 7.30 6.54 12 7.46
Realised Copper Price(2) US$/lb 3.27 3.27 - 3.43
Realised Cobalt Price(2) US$/lb 11.00 12.00 (8) 12.00
Average US$/Real Exchange Rate   2.06 2.03 1 1.95

(1)     Average payability of 89%
(2)     Including prior period QP adjustments

The C1 unit cash cost improved for the third consecutive quarter, reducing from US$5.38/lb during Q3 to US$4.91/lb during Q4. The improvement from the third quarter was driven by: favourable tax credit adjustment (US$0.13/lb); write-back of stores provision created earlier in the year (US$0.09/lb); lower than normal mining waste strip-ratio for November and December (US$0.12/lb); continued cost reduction and optimisation initiatives; the BRL softening slightly against the USD (Q4 2012: 2.06 versus Q3 2012: 2.03); and lower sales, offset by marginally lower nickel production (down 3% from Q3).

The fourth quarter cash cost included a favourable adjustment relating to tax credits not previously claimed. As part of its optimisation program, the Company has been working with independent tax advisors to determine the claimability of certain Brazilian input tax credits on its production costs. The work was finalised during the fourth quarter and adjusted accordingly.

CORPORATE

Cash and Debt

As at 31 December 2012, Mirabela held balances of cash on hand and on deposit of US$143.01 million. The decrease in cash on hand from 30 September 2012 (US$160.19 million) was driven by: an interest repayment of US$17.50 million on the senior unsecured notes; finalisation of nickel sales that occurred between February 2012 and July 2012 at an average finalisation price of US$7.69/lb compared to an average provisional price of US$8.13/lb (US$8.00 million); and capital, exploration and study costs of US$7.01 million. This cash outflow was offset by positive cash flow from operations.

Share Capital

As at 31 December 2012 the Company's issued share capital consisted of 876,582,736 ordinary shares. A balance of 4,150,000 unlisted options and 2,144,857 performance rights were outstanding. No options were exercised during the quarter.

2013 GUIDANCE (Please refer to the Disclaimer - Forward Looking Information below)

Mirabela is targeting production of 22,000 to 24,000 tonnes of nickel in concentrate for 2013. Production is expected to be stronger in the second half of the year due to improved access to higher quality South Pit ore during the second half of the year and scheduled maintenance work on the primary crusher during the first half of the year.

Unit cash costs are expected to average between US$5.00/lb and US$6.00/lb for the year. The spread in the average unit cash cost guidance is due to the large number of factors impacting on unit cash cost outcomes, including nickel price, copper price and the Brazilian Real / US dollar exchange rate. The Company will provide more specific unit cash cost guidance during the course of the year if possible.

Capital expenditure, exploration and study costs for 2013 is forecast at between US$40 million and US$50 million. Major items include: mobile equipment rebuilds; tailing storage facility wall lift; general sustaining capital; and capitalised mining costs. Exploration tenement holding costs and operational optimisation study costs will be charged to Other Expenses in the Statement of Comprehensive Income as incurred. The Company is not anticipating material expenditure on growth activities for 2013.

Disclaimer - Forward Looking Information

Certain information in this document, including all statements that are not historical facts, constitutes forward-looking information within the meaning of applicable Canadian & Australian securities laws. Such forward-looking information includes, but is not limited to, information which reflects management's expectations regarding Mirabela's future growth, results of operations (including, without limitation, future production and capital expenditures), performance (both operational and financial) and business prospects (including the timing and development of new deposits and the success of exploration activities) and opportunities. Often, this information includes words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate" or "believes" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

In making and providing the forward-looking information included in this document, the Company has made numerous assumptions. These assumptions include among other things: (i) assumptions about the price of nickel and other base metals; (ii) assumptions about operating costs and expenditures; (iii) assumptions about future production and recovery; (iv) that the supply and demand for nickel develops as expected; (v) that there is no unanticipated fluctuation in interest rates and foreign exchange rates; and (vi) that there is no material deterioration in general economic conditions. Although management believes that the assumptions made and the expectations represented by such information are reasonable, there can be no assurance that the forward-looking information will prove to be accurate. By its nature, forward-looking information is based on assumptions and involves known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance or achievements, or results, to be materially different from future results, performance or achievements expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include among other things the following: (i) decreases in the price of nickel and copper; (ii) the risk that the Company will continue to have negative operating cash flow; (iii) the risk that additional financing will not be obtained as and when required; (iv) material increases in operating costs; (v) adverse fluctuations in foreign exchange rates; (vi) the risk that concentrate produced will not meet certain minimum specifications; (vii) production estimates may not be accurate; (viii) environmental risks and changes in environmental legislation; (ix) and failure to comply with restrictions and covenants under the Unsecured Senior Notes.

The Company's MD&A and the Annual Information Form contain information on risks, uncertainties and other factors relating to the forward-looking information. Although the Company has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking information, there may be other factors that cause actual results, performances, achievements or events not to be anticipated, estimated or intended. Also, many of the factors are beyond the Company's control. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information disclosed in this document is qualified by this cautionary statement.

 

SOURCE: Mirabela Nickel Ltd.

For further information:

CONTACT DETAILS

Chris Els
Chief Financial Officer & Company Secretary
Telephone: +61 439 930 333
shanik@mirabela.com.au 

Ian Purdy
Chief Executive Officer & Managing Director
Telephone: +61 410 491 908
shanik@mirabela.com.au