Mirabela Nickel Limited - Quarterly Activity Report for the Period Ended 31 March 2012
PERTH, Australia, April 24, 2012 /CNW/ - Mirabela Nickel Limited ("Mirabela" or the "Company") (ASX: MBN) (TSX: MNB) is pleased to announce its unaudited first quarter results for the period ended 31 March 2012.
HIGHLIGHTS
- Production for the quarter of 4,245 tonnes of nickel in concentrate (down 16% from Q4 2011: 5,029 tonnes due to lower mined nickel grade)
- Sales for the quarter of 4,155 tonnes of nickel in concentrate (down 19% from Q4 2011: 5,155 tonnes)
- Mining material moved of 10.7 million tonnes for the quarter was in accordance with the mine plan
- Average nickel recovery of 58% (Q4 2011: 60%) and average nickel head grade of 0.48% (Q4 2011: 0.53%) for the quarter
- Unit cash costs of US$7.37/lb for the quarter (Q4 2011: US$7.42/lb)
- Cash on hand and on deposit and trade receivables of US$89 million (Q4 2011: US$87 million) at quarter end
- De-sliming plant successfully commissioned and in ramp-up
- Successful open pit extension drilling programme nearing completion
OPERATIONS
Mirabela has completed a challenging first quarter with low mine grades influencing the production results and unit costs. During the quarter the company completed a review of mining operations which improved mined grade and the first phase of a comprehensive cost reduction programme with no disruption to operations.
Mirabela is targeting 19,000 to 21,000 tonnes of nickel in concentrate with cash unit costs expected to move towards US$6.00/lb by the end of 2012. Capital expenditure for 2012 is forecast at US$60M of which US$18.5M has been spent to 31 March 2012. The Company has reduced its annual production guidance range by 1,000 tonnes in response to the low grades mined during the first quarter.
Safety
Despite the additional pressure of the major organisational restructure and downsizing, Mirabela continued its strong safety performance with no lost time injuries during the quarter. The 12 month moving average Lost Time Injury Frequency Rate closed the quarter at 1.14, improving from 1.27 at the end of 2011. 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 Mar 2012 |
Three months ended 31 Dec 2011 |
% change favourable/ (unfavourable) |
Year to Date 2012 |
||
Mining | |||||
Total Material Mined | Tonnes | 10,717,738 | 12,163,355 | (12) | 10,717,738 |
Ore Mined | Tonnes | 1,773,900 | 1,997,276 | (11) | 1,773,900 |
Nickel Grade | % | 0.43 | 0.49 | (12) | 0.43 |
Processing | |||||
Total Ore Processed | Tonnes | 1,535,292 | 1,566,888 | (2) | 1,535,292 |
Nickel Grade | % | 0.48 | 0.53 | (9) | 0.48 |
Copper Grade | % | 0.12 | 0.15 | (20) | 0.12 |
Cobalt Grade | % | 0.01 | 0.02 | (50) | 0.01 |
Nickel Recovery | % | 58 | 60 | (3) | 58 |
Copper Recovery | % | 70 | 66 | 6 | 70 |
Cobalt Recovery | % | 34 | 32 | 6 | 34 |
Production | |||||
Nickel in Concentrate Produced | DMT | 4,245 | 5,029 | (16) | 4,245 |
Copper in Concentrate Produced | DMT | 1,331 | 1,544 | (14) | 1,331 |
Cobalt in Concentrate Produced | DMT | 76 | 79 | (4) | 76 |
Sales | |||||
Nickel in Concentrate Sold (1) | DMT | 4,155 | 5,155 | (19) | 4,155 |
Copper in Concentrate Sold | DMT | 1,449 | 1,667 | (13) | 1,449 |
Cobalt in Concentrate Sold | DMT | 80 | 85 | (6) | 80 |
(1) Includes nickel sales volume adjustments upon finalisation of assays.
Mining
Mirabela achieved the mining material movement plan for the first quarter with 10.7 million tonnes of material moved for 1.8 million tonnes of ore. Mined grades were lower (0.43%) with the majority of ore sourced from the Central pit. Mining activities for the first quarter have focused on establishing the North, South and Central pits as a sustainable platform to deliver the planned ore feed for the year. The work has progressed as per the plan and is on track for completion by the end of April 2012. This work mitigates production risk in the second half of the year by the establishment of a sustainable schedule that allows blending options across a range of mining benches.
The mined grades have improved from the 0.4% average achieved for January to above 0.5% currently being mined. The poor nickel grades achieved in the first quarter was due to a combination of low in-situ ore grades and a high level of mining dilution in the Central pit zone which was exacerbated by the 50 metre ore reserve drill spacing. The geological resource model has now been updated for detailed ore zone and faulting information gathered during mining. During the quarter Mirabela achieved solid performance from its truck and drilling fleets and was able to stand down two of the three expensive drilling contractors. The Company is awaiting the delivery of four new DML drill rigs which are currently in customs in Brazil. Loader availability was challenging for the quarter and will be a key focus for the second quarter.
Processing
During the quarter 1.5 million tonnes of ore was milled, grading at an average of 0.48% nickel and achieving an average recovery of 58%. Throughput was restricted predominantly by the poor quality of the ore mined with high levels of fines and MgO present in the ore. Recovery performance for the quarter was on plan relative to the ore quality. During the quarter Mirabela produced 4,245 tonnes of contained nickel in concentrate, a decrease of 16% from Q4 2011, 1,331 tonnes of contained copper in concentrate, and 76 tonnes of contained cobalt in concentrate.
4,155 tonnes of nickel in concentrate was sold to Mirabela's off-take partners, Votorantim Metais Niquel S.A. and Norilsk Nickel, a decrease of 19% from Q4 2011. One export shipment to Norilsk Nickel was completed during the quarter. Going forward the company expects the timing of shipments to Norilsk Nickel to be approximately every second month. Steady deliveries to Votorantim continued throughout the quarter.
The de-sliming plant construction was successfully completed and the plant was commissioned during the quarter. The plant is currently in ramp-up and the Company expects to provide a performance report at the end of the second quarter. The second crusher construction is on track with the completion of civil works and the crusher installation underway. Commissioning is expected to be completed during the second quarter. The new process plant flow sheet, in combination with ongoing optimisation of reagents and grind size, is expected to improve the plant performance in the short and medium term, both in terms of throughput and nickel recovery.
Personnel
During the quarter the Company restructured its operations in Brazil and removed over 100 staff positions, pre-dominantly in the operations support and administration areas. The changes were made with no disruption to production and no serious safety incidents. The Company is now focused on rationalising its contractors and service providers.
Exploration
(Refer Competent Person Statement at the end of the report)
Mirabela is pleased to announce new drilling results including best results with composited down-hole intersections of 95m grading 0.86% nickel and 97m grading 0.75% nickel.
The results from the ten open pit extension drill holes completed to date closely match our resource interpretation and potentially substantially increase our current open pit mining resource of 198 Mt grading 0.52% nickel. The results show the continuation of the ore-body underneath the North pit and support the trend of improving widths and grades at depth. Work is continuing to fully evaluate the resource potential and its amenability to the open pit.
Drilling is continuing with another four holes in progress or planned. The Company expects to announce the results of these remaining drill holes during the second quarter and is targeting an updated in-pit resource during the third quarter.
A summary of the drilling results is provided in the table below. More details of these results are set out in Appendices 1 and 2.
Composite result from Pit Extension Drilling (1)
Hole ID | From (m) | Composite down-hole width (m) |
Ni% | Cu% |
MBS-623 | 492 | 95 | 0.86 | 0.20 |
MBS-624 | 519 | 42 | 0.76 | 0.19 |
MBS-625 (2) | 542 | 13 | 0.53 | 0.16 |
MBS-626 | 691 | 82 | 0.83 | 0.25 |
MBS-629 | 635 | 45 | 0.86 | 0.21 |
MBS-630 | 438 | 60 | 0.68 | 0.19 |
MBS-631 | 508 | 66 | 0.72 | 0.16 |
MBS-632 | 608 | 49 | 0.56 | 0.13 |
MBS-633 | 502 | 8 | 0.54 | 0.18 |
MBS-634 | 464 | 97 | 0.75 | 0.19 |
(1) | 0.4% Ni cut-off grade, 4m minimum mining width |
(2) | Fault affected - intersected fault in position of expected mineralized zone |
Note: The standard assay method ME-ICP61 (four acid digest with an ICP-AES finish) has been used for all the drill results included in the above table. This method tends to be slightly conservative for results above 0.6% nickel and samples with a result above this are currently being assayed using an ore grade method. All the holes included in the table above will be re-reported to include the ore-grade assays with the remaining four holes during the second quarter.
Unit Cash Costs
Three months ended 31 Mar 2012 |
Three months ended 31 Dec 2011 |
% change favourable/ (unfavourable) |
Year to Date 2012 |
||
Payable Nickel Production(1) | Lbs | 8,330,074 | 9,867,320 | (16) | 8,330,074 |
Production Costs | |||||
Mining Cost | US$/lb | 3.90 | 3.61 | (8) | 3.90 |
Processing Costs | US$/lb | 2.24 | 2.03 | (10) | 2.24 |
Administration Cost | US$/lb | 0.65 | 0.80 | 19 | 0.65 |
Subtotal | US$/lb | 6.79 | 6.44 | (5) | 6.79 |
Selling Costs | |||||
Transport/Shipping Cost | US$/lb | 0.16 | 0.25 | 36 | 0.16 |
By-Product Credit(2) | US$/lb | (1.19) | (1.16) | 3 | (1.19) |
Smelter Charges | US$/lb | 1.61 | 1.89 | 15 | 1.61 |
Subtotal | US$/lb | 0.58 | 0.98 | 41 | 0.58 |
C1 Unit Cash Cost | US$/lb | 7.37 | 7.42 | 1 | 7.37 |
Unit Royalty Cost | US$/lb | 0.41 | 0.38 | (8) | 0.41 |
Realised Nickel Price(2) | US$/lb | 7.49 | 7.74 | (3) | 7.49 |
Realised Copper Price(2) | US$/lb | 3.14 | 3.30 | (5) | 3.14 |
Realised Cobalt Price(2) | US$/lb | 11.61 | 12.54 | (7) | 11.61 |
Average US$/Real Exchange Rate | 1.77 | 1.80 | (2) | 1.77 | |
Average LME Nickel Price | US$/lb | 8.92 | 8.30 | 7 | 8.92 |
Average LME Copper Price | US$/lb | 3.77 | 3.40 | 11 | 3.77 |
(1) | Average payability of 89% | |
(2) | Including prior period QP adjustments |
The unit cash cost for the quarter of US$7.37/lb improved marginally from Q4 2011 (US$7.42/lb). The benefit of lower absolute mining and administration costs as a result of the cost reduction program, together with the favourable timing of smelter charges (one shipment to Norilsk Nickel) were off-set by lower nickel production volume, the BRL strengthening against the USD and restructuring costs.
Absolute mining costs reduced quarter on quarter driven by lower mining volumes, operational efficiencies and the termination of highly priced drilling contractors. Restructuring costs amounted to US$0.20/lb mainly in the administration areas. Nickel volumes were impacted by the low mined ore grade and the processing of fines material resulting in lower processing plant throughput and recovery.
Unit production cash costs are expected to move towards $US6.00/lb by year end, driven by higher nickel production volumes and further cost reductions. Higher nickel volumes are expected through: improved ore grades and grade control practices; increased plant throughput; and increased recoveries through optimisation of the de-sliming circuit and ongoing plant optimisation. Cost reductions are expected through: reduced staff costs; rationalisation of contractor and service provider costs; and improved mobile fleet productivities.
CORPORATE
Executive Update
The Company is pleased to announce the appointment of Anthony Kocken as Corporate Chief Operating Officer, reporting to the CEO. Anthony previously worked for Xstrata Zinc as General Manger Mining and Senior Site Executive of Mount Isa Mine. He holds qualifications as a Mining Engineer with an MBA in Business Administration. Anthony has extensive operations experience and very strong technical skills. Anthony is currently based at the operations in Brazil on a full time basis.
At the end of the quarter Rubens Bichued, GM Operations Brazil, retired from Mirabela. Rubens was instrumental in building the operations team and was a key driver in Mirabela's ramp-up to full production. Rubens will continue to consult to Mirabela on a part time basis.
Cash and Debt
As at 31 March 2012, Mirabela held balances of cash on hand and on deposit of US$59.73 million and trade receivables of US$29.30 million. The decrease in cash on hand from 31 December 2011 was mainly due to: budgeted capital expenditure of US$18.50 million; finalisation of nickel sales that occurred between September and November 2011 at an average finalisation price of US$8.30/lb compared to an average provisional price of US$9.47/lb (US$13.50 million); increase in consumable spares, mainly tyres and maintenance spares (US$8.25 million); increase in broken ore stocks (US$5.20 million) and general cash flow movements.
The cash outflow was offset by the draw-down of the US$50 million Banco Bradesco S.A. working capital facility, and US$5.20 million Atlas Copco Customer Finance facility.
Share Capital
As at 31 March 2012 the Company's issued share capital consisted of 492,516,163 ordinary shares, and a balance of 4,450,000 unlisted options and 1,481,200 performance rights were outstanding.
The Company issued 734,926 shares during the quarter as a result of the conversion of 734,926 Performance Rights in accordance with the Mirabela Nickel Limited Performance Rights Plan.
No options were exercised during the quarter.
Appendix 1: New Intersections - Open Pit Extension Drilling (1)
(0.4% Ni cut-off grade)
Hole ID | From (m) | To (m) | Down hole width |
Ni% | Cu% | |
MBS-623 | 492.55 | 499.6 | 7.05 | 0.70 | 0.26 | |
MBS-623 | 513.3 | 601.5 | 88.20 | 0.88 | 0.20 | |
MBS-624 | 519 | 522 | 3 | 0.63 | 0.29 | |
MBS-624 | 603 | 642 | 39 | 0.77 | 0.18 | |
MBS-625(2) | 542 | 555 | 13 | 0.53 | 0.16 | |
MBS-626 | 691 | 773 | 82 | 0.83 | 0.25 | |
MBS-629 | 635 | 658 | 23 | 0.68 | 0.19 | |
MBS-629 | 669 | 691 | 22 | 1.06 | 0.22 | |
MBS-630 | 438 | 498 | 60 | 0.68 | 0.19 | |
MBS-631 | 508 | 518 | 10 | 0.56 | 0.21 | |
MBS-631 | 542 | 552 | 10 | 0.63 | 0.18 | |
MBS-631 | 568 | 583 | 15 | 1.10 | 0.29 | |
MBS-631 | 609 | 640 | 31 | 0.62 | 0.08 | |
MBS-632 | 608 | 639 | 31 | 0.59 | 0.15 | |
MBS-632 | 667 | 685 | 18 | 0.50 | 0.10 | |
MBS-633 | 502 | 510 | 8 | 0.54 | 0.18 | |
MBS-634 | 464 | 474 | 10 | 0.74 | 0.31 | |
MBS-634 | 525 | 545 | 20 | 0.92 | 0.26 | |
MBS-634 | 553 | 585 | 32 | 0.68 | 0.17 | |
MBS-634 | 621 | 630 | 9 | 0.52 | 0.07 | |
MBS-634 | 635 | 661 | 26 | 0.78 | 0.17 | |
(1) | All chemical analyses were completed by ALS Minerals |
(2) | Fault affected - intersected fault in position of expected mineralized zone |
Appendix 2: Drill Hole Collar Locations
Hole ID | Hole type | Survey type | Easting | Northing | RL | Hole Depth | Dip | Azimuth |
MBS-623 | Pit extension | Plan(1) | 422810 | 8431175 | 163.5 | 623.66 | -60 | 270 |
MBS-624 | Pit extension | Plan(1) | 422837.5 | 8430975 | 173.5 | 673.35 | -60 | 270 |
MBS-625 | Pit extension | Plan(1) | 422862 | 8431360 | 162.9 | 628.03 | -60 | 270 |
MBS-626 | Pit extension | Plan(1) | 423053 | 8430851 | 153.2 | 798.83 | -60 | 270 |
MBS-629 | Pit extension | Plan(1) | 422969 | 8430972 | 155.1 | 760.51 | -60 | 270 |
MBS-630 | Pit extension | Plan(1) | 422815 | 8431275 | 152 | 581.28 | -60 | 270 |
MBS-631 | Pit extension | Plan(1) | 422822.5 | 8431075 | 170 | 650.05 | -60 | 270 |
MBS-632 | Pit extension | Plan(1) | 422955 | 8431075 | 157.5 | 741.69 | -60 | 270 |
MBS-633 | Pit extension | Plan(1) | 422775 | 8431025 | 181.5 | 647.31 | -60 | 270 |
MBS-634 | Pit extension | Plan(1) | 422840 | 8430730 | 159 | 700.51 | -60 | 270 |
(1) | Final collar survey pending |
Competent Person Statement
The information in this report that relates to Exploration Results is based on information compiled by Mr Lauritz Barnes who is a consultant to Mirabela Nickel Limited. Mr Lauritz Barnes is a Member of both The Australian Institute of Geoscientists and The Australasian Institute of Mining and Metallurgy. Mr Barnes has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Barnes consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.
For further information:
Bill Bent
VP Business Development
Mirabela Nickel Limited
Telephone: +61 433 790 070
[email protected]
Ian Purdy
CEO & Managing Director
Mirabela Nickel Ltd
Telephone: +61 8 9324 1177
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