The board and management are undertaking a review of the Munali Nickel Mine following recent falls in the nickel price and delays to the mine ramp up.
Of primary importance are the issues of lower than forecast mine production and the impact of operating margins due to lower than expected nickel prices.
The reduced output combined with lower nickel prices resulted in shortages of working capital. Additional working capital finance has been raised through the combination of hedging close out, debt restructuring and recent equity placement. It is forecast these funds will allow the mine adequate working capital to ramp up to full production, based on the current mine plan and nickel prices forecast.
Management is currently working to increase ore tonnages and grade as quickly as possible. A major review of costs and reduction in non-essential expenditure is also in progress.
Other than the issues outlined above we are not aware of any fundamental problems identified with the mine resource or operating plant. The issues affecting the mine performance to date relate solely to management of the mining. These issues have been addressed and mine performance is improving significantly, though remains behind schedule.
A more detailed update will be provided as soon as these reviews are complete.'
ALB Price at posting:
9.6¢ Sentiment: LT Buy Disclosure: Held
