looks ready to pop...., page-11

I am not sure but I think there are some concerns about the consistency of grade. Here is an old comment by Barry Fitzgerald, Resouce Editor of "The Age" which at the time was encouraging.


AUZ Mines takes control of its nickel operation
GARIMPEIRO IN KALGOORLIE
Barry Fitzgerald
August 15, 2005

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Once the formal presentations and liver-bashing of last week's Diggers & Dealers was out of the way, many of the delegates that hadn't fled Kalgoorlie on the first flight out took up one of the dozen invitations on hand for a mine tour.

Apart from anything else, the chance to kit-up for a visit to a mine-face in humid conditions and a couple of hundred metres underground is about the best hangover cure going around.

The trick is to pick one that doesn't involve a light plane or a drive of more than a 100 kilometres from Kalgoorlie's main drag. The Blair nickel mine of Australian Mines (AUZ) fits the bill nicely.

Blair is all of 35 kilometres south-east of town and by the standards of the Kalgoorlie region, it's quite a nice spot for a picnic. That's all it might have been reduced to if AUZ hadn't sorted out the operation earlier this year by paying off the contractor and taking control of things itself under a new mine manager, Cullum Winn.

A change to selective mining produced the goods in the June quarter, with operating cash costs falling from an unsustainable $A11.04 a pound of nickel in the March quarter to $A6.92 a pound.
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Winn's plan is to make Blair a stable producer of 75-105 tonnes of (payable) nickel a month. The cash flow from that, plus AUZ's cash kitty of about $2 million, means that at long last, the search for life-extending reserves can kick off.

As things now stand, Blair's reserves of 49,345 tonnes at 3.32 per cent nickel are good until March 2007. But there is plenty of exploration upside on AUZ's next best asset — its big exploration ground position surrounding the mine.

A $1.2 million exploration program, both for nickel and gold, kicks off in about six weeks, and the new owner of WMC, BHP Billiton, has indicated a willingness to help find extensions to the Blair orebody through the application of some high-tech exploration wizardry it has at its disposal.

As the owner of WMC, BHP wants to keep third-party supply ore sources up to its Kambalda nickel concentrator. But in the case of AUZ, it is also the holder of some 2 million shares.

At AUZ's princely price on Friday of 1.7¢ a share for a market capitalisation of $7.3 million, BHP's Chip Goodyear won't be giving the group's $34,000 holding much thought. But at least the stock got a move on last week, with Friday's closing price up 13 per cent for the week.