minara beware

http://financial-news-update.info/llust-for-locals-nickel-mantle/

MINARA beware: European Nickel is eyeing its status as the second-biggest locally listed nickel producer, behind only BHP Billiton.
European Nickel (ENK) 41c
Minara Resources (MRE) 71.5c
But European Nickels main asset is the Caldag laterite project in Turkey, far from WAs proven nickel belt.
The London-based ENK listed here via its merger last month with Perth-based Rusina Mining.
Having cashed $US100 million of a planned $US300m debt raising, ENK this week placed $US60m to Canadas Hunter Dickinson group in two tranches. Unusually the pricing is well above the prevailing share price: $US5m immediately at 55c apiece and then $US55m at 76c. The second is conditional on shareholder consent and completion of the Caldag financing. Theres no out clause if the market turns nervy.
"Theyve taken a long-term view of the nickel market and short-term fluctuations are not something theyre concerned with," says deputy executive chairman Simon Purkiss.
The core appeal is a new heap-leach technology that reduced the (notoriously expensive) cost of processing laterites. The know-how was developed in BHPs labs, which is ironic given BHP couldnt make a decent fist of its Ravensthorpe mine in WA.
Caldag has compliant reserves of 33.2 million tonnes at an average grade of 1.13 per cent. Management has targeted 20,000 tonnes per annum over a 14-year life, at an average cost of $US3.59 a pound. Nickel is currently fetching about $US8.70 a pound, with management targeting a 32 per cent internal return assuming an average $US7 price.
Caldag has been a slow-burn story: the project was ready to go in 2006 but then it took 2 1/2 years to receive the forestry permit. By that time, the GFC was in full flight and no one was interested.
ENK is a speculative buy. Apart from tin, nickel has been the only base metal to gain this year (up 5 per cent). The shares are trading at a sharp discount to at least one knowledgeable partys perception of their value.
As for laterite nickels poor-cousin status, its worth noting the previously struggling Minara, 60 per cent owner of the Murrin Murrin mine, is churning out excess cash. Having raised $210m of equity during the financial rout, Minara is returning $111m (9.5c a share) to investors. Hold.