allegiance nickel reserves up in tas

Allegiance nickel reserves up in Tas
Wednesday February 6, 2008, 1:49 pm


Takeover target Allegiance Mining NL has reported a 12.9 per cent increase in contained nickel reserves at its flagship Avebury nickel project in Tasmania, but the nickel grade has decreased by about one per cent.

This was foreshadowed in the company's December quarter report.

Its total nickel grade is now 0.96 per cent, above its 0.7 nickel cut off grade, which is the grade of material below which mining is uneconomic.

Production is expected to commence at the project this quarter.

Allegiance has lifted the proportion of ore reserves in the "proved" category - the top tier under Australia's mineral reporting code - with overall ore tonnes up by about 23 per cent.

The company's shares were down two cents or 1.89 per cent at $1.04 at 1306 AEDT.

A source close to Allegiance said this did not represent a negative investor reaction to Tuesday's report, as the market generally was down.

DJ Carmichael resource analyst James Wilson said a lower nickel price overnight, closing at $US26,800 per tonne, probably contributed to the share price dip.

The Allegiance source said the company's shares continued to trade higher than the offer price from Zinifex Ltd of $1 for each Allegiance share, valuing the target at $744.93 million.

Zinifex's offer expires on Friday.

Zinifex shares were down 67 cents, or 6.5 per cent, at $9.63 at 1307 AEDT.