Closing In On Nickel Production - Another Successful Quarter

    SYDNEY, Australia, April 30 /CNW/ Allegiance Mining (ASX Code: AGM) is
pleased to present its quarterly results ending 30th March 2007. Following are
the main points of what has been achieved. A full copy is available on the
Allegiance mining website.


    -   Construction is at full pace and production is scheduled to commence
    in the 4th Quarter 2007.

    -   The main long-lead item, the primary ball mill has been fabricated by
    Outokumpu Technology Australia and the largest mill component, the
    shell barrel, was delivered to Avebury site on 20 April 2007 - 17
    days ahead of schedule.

    -   Engineering firm, Metplant of Perth relocated its construction team
    to the Avebury process plant site in January-February and site
    construction offices are fully equipped and staffed.

    -   The project will mill 900,000 tonnes of ore producing 8,500 tonnes of
    nickel ("Ni") in concentrates pa. The revised business plan currently
    extends to June 2016 - to extend as resources expand.

    -   All infrastructure components including roads, Tasmanian grid
    hydro-electrical power, water management systems, site construction
    office and Zeehan office-accommodation are complete.

    -   The Avebury nickel mine is fully operational and has delivered
    10,000 tonnes of normal run-of-mine ore to stockpile. Ore geometry
    and grades encountered to date are as planned.

    -   The entire senior management team for the Avebury Project has been
    successfully recruited.


    -   BISON discovery was announced during the Quarter. This is not yet
    included in resources.

    -   The North Avebury Extended orebody has been extended a further
    200 metres below previous drilling - this too is not yet included in

    -   In-fill drilling at East Avebury-Saxon is continuing and an initial
    resource has been announced.

    -   Resources increased 15% to 12 million tonnes grading 1.11% Ni
    containing 131,000 tonnes of Ni at a 0.7% Ni cut-off grade.
    Application of strict new resource classification boundaries, Ore
    Reserves stand at 3.35 million tonnes grading 1.16% Ni, sufficient
    for initial production to mid 2011.

    -   Infill drilling will commence in the mine in mid-May so as to
    materially increase reserves by year-end, well ahead of production to
    allow an early assessment of mill-mine expansion options.

    -   Orebody widths are typically 10 metres to 40 metres in good ground

    -   Drilling west and especially east of the known resource is
    encountering additional mineralisation.


    -   Cash balance at the end of March stood at $39.15 million.

    -   Share placement to Jinchuan Nickel Group of China raised A$4 million,
    announced in January.


    US$2.8 billion offtake agreement with Jinchuan Nickel Group of China
remains a cornerstone agreement that brings major benefits to the Avebury
Nickel Project.

    TASK 2007
                                         Q1        Q2        Q3        Q4
    (roads, power, water, office &
     accommodation)                   Completed

    Ventilation & Service Shafts,
    Pump Station & Mine Power         Completed

    Mine Contract and Mobilisation    Completed

    Mill Site, Water Management &
     Tailings Storage Facility                 Completed

    Mill Design & Engineering                  60% completed

    Mill Procurement                           90% completed

    Mill & Process Plant Construction          20% completed

    Mill & Process Plant Commissioning

    Nickel Production

    Chairman, Tony Howland-Rose said "Mining operations commenced in earnest
during the Quarter with 10,000 tonnes of ore now stockpiled. All sectors of
mine and mine site are now connected to the State hydroelectric grid.
Construction and fabrication continue apace, with major equipment items
arriving on site - including the ball mill shell which arrived early! The
mechanical completion date remains in place with October-November being the
    During the Quarter, Allegiance shares became a component of the Standard
& Poors ASX 300 index, and as such, gained qualification for investment by a
broad range of local and overseas institutions. This, in part, may account for
the recent firm share price.
    I have many conversations with shareholders each quarter and the soaring
nickel price is top of the list. I believe that the nickel price will remain
firm for the next few years. Only when the increase in production of new mined
nickel exceeds the increase in demand will nickel prices fall. New uses may
well add materially to this demand. Many of you will be aware that Toyota has
announced that in the future, it expects all of its cars to be hybrids. If
Toyota delivers this plan, it will require 500,000 additional tonnes of nickel
for those hybrid electric batteries.   Current annual world production of
nickel will not exceed 1,400,000 tonnes.
    Thus good times for nickel and great times ahead for Allegiance!

    A full copy of this announcement is available on the Allegiance website.

For further information:

For further information: Tony Howland-Rose, Chairman: +612 9397 7777 or
+61 418 972 112

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