nickel price is down, page-2

Not sure if this has been posted (from inside trader)

We picked Minara recently and it has seen a sharp sell of due mainly to concerns about its gas supply to continue normal operations following the recent gas crisis in WA.

Directors have continued buying just recently showing a great sign of confidence. It is also currently paying an 11.3% dividend and has a low PE ratio of 6. Worth a look if you want a solid company that appears to be oversold. Keep an eye on the nickel price and the gas concerns.


This weeks pick is Minara Resources Ltd (MRE)

Recent announcement to ASX regarding gas supply...



The gas supply situation on Varanus Island has had a well documented impact across Western Australia.

Minara moved rapidly to minimise the impact of this gas disruption on its WA operation. We have been able to secure temporary gas supplies which enabled us to resume operations only days following the Varanus outage, albeit at reduced rates. The plant is operating to maximise production with the reduced gas availability. We are currently operating the plant at approximately ¨ø of our normal production rates. From 1 July we have a new long term gas supply contract which sources some of our gas requirements from alternative locations. Because of this we are confident that we can maintain production at the current rate. We are also attempting to secure additional gas supplies to enable us to return to full production.

Based on current information, our revised market guidance on production of 31,000 - 35,000 tonnes, remains unchanged. We have incorporated in these production guidance figures the expected impact of the current and forecast reduced rates. Following market advice from Apache, partial production from Varanus Island may be available from August. This should enable us to return to full production.

Minara holds comprehensive business interruption insurance and has lodged a claim with respect to the gas supply disruption.

The nickel market continues to be volatile however we believe the market fundamentals are still robust and it has a sound foundation for the next two to three years. With growth in demand primarily driven by China and the increasing use of stainless steel, we anticipate the nickel market growing by around 4% to 6% a year over those years.


The cobalt market has been very strong this year. Minara is the fifth largest cobalt producer in the world and it is an important additional revenue stream for the Company. The strong cobalt price has assisted in alleviating other cost pressures. The cost of sulphur has risen sharply over the past 12 months and Minara imports approximately 430,000 tonnes per year. Minara buys sulphur on long term contracts at rates substantially below the current spot market price.

Additionally we hold 6 months inventory on the ground at any given time. We anticipate the sulphur market to return to a normal profile in the second half of 2009 due to a supply/demand response. We will continue to advise as further information becomes available.



about the company from their website...

Minara Resources Limited is Australia's second largest nickel producer, and one of the top ten in the world.

Minara owns and operates the Murrin Murrin Nickel Cobalt Joint Venture project (60 percent Minara, 40 percent Glencore International AG). Murrin Murrin is a world class hydrometallurgical project, using sulphuric acid in high temperature, high pressure autoclave vessels to heap leach nickel and cobalt from low grade lateritic (oxidised) ores.

Record production was recorded at Murrin Murrin in 2006 with 31, 524 tonnes of nickel up over 3000 tonnes from 2005 and 2, 096 tonnes of cobalt up over 300 tonnes from the previous year. These significant improvements reflect the shift in the maintenance focus towards a planned maintenance regime.

Profits reflected this record production and the strength of the nickel market and Minara recorded a pre tax profit for the period ending 31 December 2006 of $402.1 million with a net profit of $338.7 million.

Developing new processes and refining existing technologies is a focus for the company. During 2006 Minara invested in a range of initiatives to achieve these objectives.

Minara has constructed a heap leach demonstration plant to test its technology developed to treat low grade nickel laterites to extract an independent nickel stream. The demonstration plant is designed to produce a further 2000 tonnes of nickel and 150 tonnes of cobalt per annum with the ability to be expanded to 10, 000 tonnes if the first stage is successful.