finance fails re worlds biggest nickel mine, page-4

$8/lb will get Ravensthorpe (BHP) back to cash positive at full production refer below story from mineweb:


BHP's Ravensthorpe nickel mine slowly building up production BHP’s big $2.2 billion Ravensthorpe nickel operation should produce about 7,000 tonnes in first half 2009 – but is still two years away from full output and needs higher nickel prices to be profitable – even at full output

Nickel production at Australia's Ravensthorpe mine will rise to 7,000 tonnes in the January-June half year from 2,000 tonnes in the current half, owner BHP Billiton Ltd (BHP.AX) (BLT.L) said on Wednesday.

The mine, which started production in 2007 about nine months behind schedule, cost about $2.2 billion to build and is one of the largest nickel-making facilities in the world.

Since starting, world nickel prices have more halved, pressuring BHP and other miners on costs and prompting predictions that mines will decrease rather than increase output.

Nickel, which reached $51,650 a tonne in May 2007, sells for around $11,900 a tonne or $5.40 a pound. On Friday it hit a more than five-year low of $8,850 a tonne, or $4 a pound.

CLSA Pacific Markets analyst Ahmad Solihin said in a report on Wednesday that a lot of nickel companies would be booking losses at current nickel prices.

In a presentation to analysts visiting the mine in Western Australia on Wednesday, BHP said about 85 percent of the operating costs were priced in Australian dollars, providing a buffer against falling U.S. dollar nickel prices.

BHP said in May it would be at least two years before the Ravensthorpe mine reaches full capacity of 50,000 tonnes a year.

BHP Chief Financial Officer Alex Vaneslow has said Ravensthorpe needed a nickel price of between $5 and $8 a pound to be cash positive at full production.

Earlier on Wednesday, Australia's No.2 nickel miner, Minara Resources Ltd (MRE.AX), announced a renounceable rights issue to raise A$210 million to withstand volatility in the nickel market. ($1=A$1.53) (Reporting by James Regan)