Quoted from MININGNEWS"LIFE in the world of underground nickel...

Quoted from MININGNEWS
"LIFE in the world of underground nickel mining has been a tough gig lately. The collapse of nickel prices late last year and the demise of several big name projects had many investors running scared. But Mincor Resources kept a steady head and, as the base metal claws its way back into positive territory, the company is reaping the rewards and making new discoveries along the way.

In an interview with MiningNews.net, managing director David Moore explained that Mincor’s ability to stay afloat in this tumultuous time had relied heavily on “flexibility”, not only across operations at its underground mines, but also in its mining style.

The company owns the Miitel, Otter Juan, Mariners, Redross, McMahon, Coronet-McCloy, Wannaway and Carnilya Hill mines, as well as numerous resource-level projects and exploration prospects in the Kambalda Nickel District in Western Australia.

All of its mines are underground narrow-vein operations, and all are owned 100% by Mincor, apart from Carnilya Hill, which is 70% owned by the company.

Since the end of 2008, Mincor has made significant engineering changes to the way it extracts its nickel, and has also put three mines on care and maintenance to ensure its survival in the current economic downturn.

“During the boom we used quite large equipment underground and mined the width of the ore body plus the added waste rock, giving very high productivity, but at the sacrifice of some cash cost, but in the scheme of the then current nickel prices the added cash costs was a small price to pay,” Moore said.

“So when the nickel price started to falter, we did away with the larger equipment and switched focus to smaller narrow-vein mining equipment, reducing the dilution of the ore, increasing the head grade and dropping cash costs.

“We had to move quickly to get these production changes in place after October when the nickel prices collapsed and felt we did this with some success.

“Although the fall of the price was so dramatic we had to take the additional step of closing some of the mines too.”

Mincor suspended operations at Miitel in December 2008 and it remains on care and maintenance.

However with current ore reserves of more than 430,000 tonnes, including 100,000t of fully developed ore, the mine is capable of a rapid and low-cost return to production, which Moore said was a key element in Mincor's positioning for the next upturn in the nickel price.

“Left behind in Miitel, a mine that has been largely developed, is about 100,000 tonnes of ore, grading about 3 per cent nickel, which means you could essentially go in there tomorrow and start mining, stoping in many cases, without any further capital expenditure,” Moore said.

“When we re-start Miitel, it will be very quick and very easy, we will be going straight into a high cash flow situation and immediately producing high grades of ore.

“But we need to wait for some of the volatility in the market to settle down before we re-open.”

The Wannaway mine is also on care and maintenance, although significant nickel resources remain below the current level of development, as well as further exploration potential.

Mincor has also suspended development of the decline at McMahon, however, mining is still underway from the reserves that had been accessed before the decline development was suspended.

The company has also implemented several minor, but important organisation changes since last year, including the switch to owner-operator at Carnilya Hill, as well as revising several key contracts and internal staffing adjustments.

The contact at Mariners expires this September and will go out to tender.

The March quarter results reflected the group’s organisational changes with costs down to the lowest level in three years and the highest quarterly nickel grade in five years.

Moore said the June quarter results were expected to be on par with March and not yield any negative surprises, although he could not comment further on specific figures.

Australia’s third-largest nickel producer reported average cash costs of $A5.25 per pound payable nickel for the March quarter, down from $5.61/lb in the December quarter, while the average nickel grade jumped to 3.26%, up from 2.89% in the December quarter.

Moore said Mincor remained on track to deliver its revised production target of 16,500-17,500 tonnes of nickel-in-ore for 2009.

The next step for the Perth-based miner is to develop its resource inventory, and recent bumper nickel results at its Mariners mine have given hope that a new orebody lies below the existing mine.

The preempted “N10” orebody could lie below the currently producing N09 orebody and, if it turns out to exist, could add up to four years to the operation’s mine life.

With a strong financial position and no debt, Mincor remains confident of its future, and with nickel showing promising signs of recovery – this week trading at an average $14,500 per tonne, compared to December averages of $10,000/t – there is every possibility full production could be just around the corner.

“The downturn is an opportunity to strengthen the company and when the time is right Mincor will ramp up production from a re-set cost base and an expanded resource inventory,” Moore concluded"