Mirabela Nickel Limited - Quarterly Activity Report for the Period Ended 31 December 2010

ASX Code: MBN
TSX Code: MNB

Number of shares: 491,561,237

PERTH, Australia, Jan. 27 /CNW/ - Mirabela Nickel Limited ("Mirabela" or the "Company") is pleased to announce its unaudited fourth quarter results for the period ended 31 December 2010.

HIGHLIGHTS

  • Production of 3,676 tonnes of nickel in concentrate for the quarter (Full Year:10,375t)
  • Sales of 3,104 tonnes of nickel in concentrate for the quarter (Full Year: 9,956t)
  • Break-through plant performance with average nickel plant recovery of 60% for the quarter (December average:  62%)
  • Plant throughput of 1.2Mt of ore for the quarter, above nameplate capacity (108%)
  • Total material mined for the quarter of 9.1Mt (Full Year:29.1Mt)
  • Continued decrease in unit cash costs to US$6.27/lb for the quarter; expected to continue with increasing production levels (Full Year: US$7.00/lb)
  • Mirabela strengthened the Board with the appointment of Geoff Handley and Ian McCubbing as non- executive directors

OPERATIONS

Ramp up of the Santa Rita operation continued during the fourth quarter. The operation is expected to reach an annualised full capacity of between 23,000 to 25,000 tonnes of contained nickel in concentrate per annum in 2012.  The focus for 2011 will be on the completion of the open pit pre-strip and the expansion of the processing plant to 7.2 Mtpa.

Mirabela is currently updating its NI 43-101 Technical Report and will provide production guidance for 2011 at the end of March 2011. January production has been restricted by mechanical problems with the SAG mill motor which are expected to be resolved during early February.  The estimated impact on January production is approximately 700t of nickel which maybe either partially or fully recovered during 2011. The first shipment of concentrate to Norilsk Nickel was successfully loaded during January.

Safety

Since commencing operations the project's strong safety performance has continued with one lost time injury for the fourth quarter.

The Lost Time Injury Frequency Rate for the year was 1.1, an outstanding result for the first year of operations and well ahead of the Brazilian mining average. The implementation of safety training and safety improvement programmes is continuing.

Production Statistics

             
    Q4 2010 Q3 2010 Q2 2010 Q1 2010 Full Year
Mining            
Total Material Mined Tonnes 9,079,000 7,424,000 7,099,000 5,456,000 29,058,000
Ore Mined Tonnes 924,000 846,000 663,000 653,000 3,086,000
Nickel Grade % 0.55* 0.55* 0.55* 0.56* 0.55*
             
Processing            
Total Ore Processed Tonnes 1,244,000 942,000 840,000 778,000 3,805,000
Nickel Grade % 0.50* 0.52* 0.52* 0.51* 0.51*
Copper Grade % 0.11 0.12 0.13 0.15 0.13
Cobalt Grade % 0.02 0.02 0.02 0.02 0.02
Nickel Recovery % 60 49 52 48 53
Copper Recovery % 74 68 67 62 68
Cobalt Recovery % 31 27 30 28 29
             
Production            
Nickel in Concentrate Produced DMT 3,676 2,405 2,304 1,991 10,375
Copper in Concentrate Produced DMT 980 774 764 721 3,239
Cobalt in Concentrate Produced DMT 62 41 40 35 179
             
Sales            
Nickel in Concentrate Sold DMT 3,104 2,359 2,505 1,987 9,956
Copper in Concentrate Sold DMT 832 753 824 721 3,129
Cobalt in Concentrate Sold DMT 53 37 43 36 168
             

* The primary difference between the grade mined and the grade processed is due to the additional processing of lower grade material (not classified as ore) whilst the ramp up of the mining operation is catching up to the processing plant. 

Mining

The improvement in the mining operations seen during the third quarter 2010 carried through to the fourth quarter with record material movement achieved during the quarter of 9.1 million tonnes.

During the fourth quarter a total of 924,000 tonnes of ore was mined at an average nickel grade of 0.55%. The South Pit production increased during the quarter with the mining of good quality ore with minimal fines. The mining team continued their focus on waste removal to open up the strike length of the open pit, which will provide more mining flexibility and is critical for the ongoing ramp-up to the targeted full mining production capacity of 55 Mtpa material moved.

The planned expansion to the mining fleet was completed during the quarter with six hired CAT 777 trucks, three purchased CAT 785 trucks, a purchased Atlas Copco DML drill rig, two hired Bucyrus 37HR drill rigs and two hired CAT D9 Dozers added to the fleet, whilst the order was placed for four Komatsu Dozers with delivery in the first quarter of 2011.

Processing

Break through plant performance was achieved during the quarter with above nameplate throughput and a step change in recovery performance.

During the quarter a total of 1.2 million tonnes of ore was milled at an average recovery of 60% for the quarter, with plant throughput improving to 108%. The blending of low grade ore into the mill feed continued. Despite the low grade feed, the plant achieved average recoveries of 62% for December.

The improved recovery performance is a direct result of operational and technical improvements in reagents, grinding and the flotation regime. Material which previously recovered poorly is now achieving acceptable levels of recoveries. A pilot plant test program has been completed to determine the preferred process flow changes to provide further improvements to nickel recovery. The results have confirmed the opportunity to achieve higher recovery through mechanical separation of the fines and Mirabela is planning to install a de-sliming circuit by the end of 2011.

During the quarter a total of 3,676 tonnes of contained nickel in concentrate, 980 tonnes of contained copper in concentrate, and 62 tonnes of contained cobalt in concentrate were produced.  All production continued to be within contract specifications and 3,104 tonnes of nickel in concentrate was sold to Mirabela's domestic customer, Votorantim Metais Niquel S.A. and export operations to Norilsk Nickel commenced in January 2011.

Full year production was above recent guidance at 10,375 tonnes of nickel in concentrate, 3,239 tonnes of copper in concentrate and 179 tonnes of cobalt in concentrate. 

Exploration

No exploration activity was conducted during the quarter.

Unit Cash Costs

             
    Q4 2010 Q3 2010 Q2 2010 Q1 2010 Full Year
Payable Nickel Production* Lbs 7,211,968 4,718,442 4,520,728 3,906,565 20,357,702
             
Mining Cost US$/lb 2.65 2.36 3.36 3.46 2.89
Processing Costs US$/lb 2.27 2.72 2.64 2.84 2.56
Administration Cost US$/lb 1.02 1.00 1.11 1.06 1.04
Transport/Shipping Cost US$/lb 0.06 0.07 0.08 0.12 0.08
By-Product Credit** US$/lb (1.05) (0.96) (1.14) (0.95) (1.04)
             
Operating Unit Cash Cost US$/lb 4.95 5.19 6.06 6.52 5.52
             
Smelter Charges US$/lb 1.32 1.57 1.57 1.60 1.48
C1 Unit Cash Cost*** US$/lb 6.27 6.76 7.62 8.12 7.00
Realised Nickel Price**** US$/lb 8.54 8.19 12.21 9.70 9.09
* Average Payability of 89%
** Including prior period QP adjustments
*** Excludes Royalty (5.5%)
****Including prior period QP adjustments and realised hedging
*****Average exchange rates for Q4: US$/Real 1.70 (Q3:1.75 Q2:1.79; Q1:1.80)

The unit cash cost of production decreased for the fourth successive quarter to US$6.27 per pound of nickel.  Unit cash costs are expected to continue to fall as production levels increase. Mining, processing and administration unit costs are expected to fall with increased production levels whilst transport unit costs are expected to rise with the commencement of shipping to Norilsk Nickel.

CORPORATE

Board Restructure

During the quarter Mr Geoffrey Handley and Mr Ian McCubbing were appointed as non-executive directors of Mirabela Nickel Limited, effective from 1 January 2011.

Mr Handley is a Geologist with over 30 years' experience in the mining industry.  Mr Handley worked as a geologist for BHP Exploration Ltd, as a chemist and geologist for Placer Exploration Ltd, and as an analyst for the AMP Society. In 1981, he joined Placer Pacific Ltd as a senior geologist and was responsible for the exploration and feasibility work at the Porgera, Granny Smith, Osborne and Big Bell mines.  Subsequently, Mr Handley was Executive Vice President, Strategic Development with Placer Dome where he was responsible for global exploration, acquisitions, research and development, and strategic planning.  Mr Handley is currently a Non-Executive Director of Eldorado Gold Corp, PanAust Limited and Endeavour Silver Corp.

Mr McCubbing is a Chartered Accountant with more than 25 years corporate experience, principally in the areas of corporate finance and M&A.  He has spent more than 13 years working with ASX-listed companies in senior finance roles, including positions as Finance Director and Chief Financial Officer in industrial and mining companies.  Mr McCubbing is also the Non-Executive Chairman of Eureka Energy Limited and a Non-Executive Director of Swick Mining Services Limited and Territory Resources Limited.  Mr McCubbing will assume the role of Audit Committee Chairman for Mirabela Nickel Limited.

In addition, Mr Craig Burton moved from Executive Chairman to the role of Non-Executive Chairman, effective 1 January 2011 and Mr Joe Hamilton resigned from the Board, effective 31 December 2010.

Cash Position

As at 31 December 2010, Mirabela held balances of cash on hand and on deposit of US$76 million, plus US$25 million held in the Santa Rita contingency reserve account.

During the fourth quarter Mirabela completed the equity fundraising and restructure of its Senior Loan Facility as described in the Quarterly Activity Report for the Period Ended 30 September 2010. During the fourth quarter the company received final proceeds of US$106 million from the issue of shares (see below); pre-paid US$38.1m of debt principal due during 2011; and added US$15 million to the contingency reserve account.

Share Capital

As at 31 December 2010 the Company's issued share capital consisted of 491,561,237 ordinary shares, and a balance of 13,300,000 unlisted options and 1,788,276 performance rights were outstanding.

During the quarter the following shares were issued as part of the finalisation of the debt restructuring as disclosed in the Quarterly Activity Report for the Period Ended 30 September 2010:

  • 57,704,466 ordinary fully paid shares, including 6,472,500 upon conversion of the subscription receipts issued on 20 September 2010;
  • 4,784,558 ordinary fully paid shares to Related Parties; and
  • 6,835,083 ordinary fully paid shares consisting of 3,439,342 shares pursuant to a Share Purchase Plan and 3,395,741 representing the shares not placed in the Share Purchase Plan by private placement.

During the quarter 1,788,276 performance rights were granted to employees under the Mirabela Performance Rights Plan as approved by shareholders at a general meeting held during the quarter. 

No options were exercised during the quarter.


SOURCE Mirabela Nickel Ltd.

For further information:

Contact Details

Bill Bent 
Vice President, Business Development 
Mirabela Nickel Limited
Telephone: +61 433 790 070 
billb@mirabela.com.au 
    Alex Buck
Director
Buckbias
Telephone: +44 7932 740 452
alex@buckbias.com

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Mirabela Nickel Ltd.

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