http://www.miningweekly.com/article.php?a_id=142520Albidon says...

http://www.miningweekly.com/article.php?a_id=142520

Albidon says Zambian mine well hedged despite metal price falls
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Published on 5th September 2008
Updated 2 hours 36 minutes ago
Perth-based nickel sulphide miner Albidon said it has sidestepped the collapse in metals prices generally through a strong hedge position and low operating costs to ensure a strongly margined nickel mine.

The mine was one of the few new nickel sulphide mines to come on stream this year, and addressing delegates at the Paydirt 2008 Africa Downunder Resources Conference, Albidon’s Dale Rogers, said the company’s bankable feasibility study on the Munali mine in Zambia, was completed at a nickel price of $4,25/lb.

“The current nickel price is at least twice that, despite recent fall,” Rogers said.

“In addition, Albidon also hedged the first five years of our production within two or three weeks of the all time highs of $20/lb in mid 2007.”

He said that hedging would start in January 2009 at $14/lb or around $29 000/t of nickel, reducing to an average $8,70/lb in 2013 – which was the level of the current spot price.

“The hedge covers an anticipated 22% to 24% of our yearly output and as a result, delivers Munali a very strong hedge position and will ensure the mine comes on stream as a new nickel sulphide mine with significant margin profile,” stated Rogers.

The mine began first production two months ago at an initial rate of 8 500 t/y contained metal and was the first production and revenue stream for Albidon.

“We have announced a low cost project upgrade that increases our production capacity to between 10 000 t to 10 500 t contained metal as soon as the first quarter of 2009,” Rogers said.

Munali has a current resource of ten million tons, grading 1,2% nickel with further infill and extensional drilling under way.

“The resource could be significantly expanded if we lowered the current conservative cut-off figure used in the feasibility study, which is the focus of our scoping study assessing further expansion in the project,” Rogers concluded.