Mirabela Nickel Limited - Quarterly Activity Report for the Period Ended 30 June 2012Canada Newswire
PERTH, Australia, July 24, 2012 /CNW/ - Mirabela Nickel Limited ("Mirabela" or the "Company") (ASX: MBN) (TSX: MNB) is pleased to announce its unaudited second quarter results for the period ended 30 June 2012.
HIGHLIGHTSProduction for the quarter of 4,276 tonnes of nickel in concentrate (Q1 2012: 4,245 tonnes)Sales for the quarter of 4,787 tonnes of nickel in concentrate (up 15% from Q1 2012: 4,155 tonnes)Achieved full year unit cash cost guidance six months early with unit cash costs of US$6.03/lb for the quarter (down 18% from Q1 2012: US$7.37/lb)Average mined nickel grade of 0.50% for the quarter (up 16% from Q1 2012: 0.43%) and mining material movement of 10.0 million tonnes in accordance with the mine planAverage processing plant nickel recovery of 58% (Q1 2012: 58%) and average nickel feed grade of 0.51% (Q1 2012: 0.48%) for the quarterCash on hand and on deposit of US$166 million (Q1 2012: US$60 million) at quarter end with the successful A$120 million equity raising strengthening the balance sheet and increasing financial flexibilityProcessing Plant 7.2Mtpa construction programme now complete with the second crusher successfully commissioned and in ramp-up and the desliming plant operationalSuccessful open pit extension exploration drilling programme completed
Mirabela has completed a successful second quarter with a step change reduction in C1 unit cash costs, improving mined nickel grades, commissioning of the second primary crusher and successful commercial testing of the desliming plant. During the quarter the Company also successfully completed its open pit extension exploration drilling programme.
Mirabela remains on track to achieve towards the lower end of the production guidance of between 19,000 to 21,000 tonnes of nickel in concentrate for 2012. During the quarter the Company successfully achieved its C1 cash unit cost guidance of moving towards US$6.00/lb by the end of 2012, six months ahead of schedule. The Company targets C1 cash costs to be below $6.00/lb for the remainder of the year at the current exchange rate. Capital expenditure is within the full year guidance of US$60 million, with US$30 million spent year to date.
Mirabela continued its strong safety performance with only one lost time injury during the quarter. The 12 month moving average Lost Time Injury Frequency Rate closed the quarter at 0.96, improving from 1.14 at the end of Q1 2012. Mirabela is continuing to target further improvements to this strong safety record through ongoing safety training and safety improvement programmes.
Production StatisticsThree monthsended30 Jun 2012Three monthsended31 Mar 2012% changefavourable/(unfavourable)Year to Date2012MiningTotal Material MinedTonnes10,042,95310,717,738(6)20,760,691Ore MinedTonnes1,504,0811,773,900(15)3,277,981Nickel Grade%0.500.43160.47ProcessingTotal Ore ProcessedTonnes1,447,7651,535,292(6)2,983,057Nickel Grade%0.510.4860.50Copper Grade%0.130.1280.13Cobalt Grade%0.010.01-0.01Nickel Recovery%5858-58Copper Recovery%7170170Cobalt Recovery%3534334ProductionNickel in Concentrate ProducedDMT4,2764,24518,521Copper in Concentrate ProducedDMT1,3161,331(1)2,647Cobalt in Concentrate ProducedDMT7276(5)148SalesNickel in Concentrate Sold (1)DMT4,7874,155158,942Copper in Concentrate Sold (1)DMT1,5701,44983,019Cobalt in Concentrate Sold (1)DMT84805164(1) Includes sales volume adjustments upon finalisation of assays.
Total material movement was in line with the mine plan and processing plant feed requirements for the second quarter, with 10.0 million tonnes of material moved for 1.5 million tonnes of ore. Mined grades improved from 0.43% during the first quarter to an average of 0.50% during the second quarter, in line with expectations.
In accordance with the mine plan, over 90% of the ore mined during the quarter was from the Central pit. The Central pit zone mined was close to the boundary of the pit and yielded higher than expected MgO levels, impacting recoveries in the process plant. During the quarter a localised geological fault was identified in the bridge between the central and south pits, which resulted in reduced ore production for the quarter by approximately 30k to 40k tonnes (2 to 3%). The short term mine plan has been adjusted to account for the fault and remediate the issue.
During the quarter Mirabela achieved solid performance from its truck and drilling fleets. The Company received delivery of four new DML drill rigs during the quarter, with all four commencing operation and completing the Company's strategy to insource production drilling. Loader availability has started to improve but remains below target and remains a key focus area moving forward.
During the quarter 1.4 million tonnes of ore was milled, at an average head grade of 0.51% nickel and achieving an average recovery of 58%. Recovery performance remained on plan relative to the ore quality, but lower than target due to higher than expected MgO levels yielded from the area being mined in the Central pit. In addition, instability in the mill and flotation circuit with the ramp-up of desliming and the addition of grinding media to the SAG mill has also made it difficult to optimise recoveries during the quarter. Optimisation of recoveries remains a key focus area and the company has a well-structured programme of test work in both the pilot plant and the process plant over the second half of the year targeting increasing recoveries.
The desliming plant was successfully ramped-up to full capacity during the quarter and was comprehensively tested with over 300,000 tonnes of stock piled ore containing high contents of chloritic altered fines material, previously considered uneconomic with recoveries ranging between 40% and 50%. Desliming was successful in removing the fines material and enabled stable performance in the flotation circuit with economic recoveries between 55% and 60%. The desliming plant will stand the Company in good stead as we move back into the North pit during the second half of the year, with an increased likelihood of batches of chloritic altered fines material from the higher level of faulting in the softer material in the North pit.
The addition of grinding media to the SAG mill as part of the ramp-up and optimisation programme for the mill circuit enabled the SAG mill throughput to be ramp-up above 900 tph early in the quarter. The higher throughput rate combined with the addition of grinding media resulted in higher than expected wear rates of the SAG mill liners. As a result to mitigate risk of damage to the SAG mill, throughput was reduced to 710 tonnes per hour (78%) for the first 20 days in June and the SAG mill relining was brought forward to the last week of June resulting in a three day shutdown to complete the works. The SAG mill throughput has been ramped back up to 900 tph post relining and work is ongoing to stabilse and optimise throughput and maintain an expected annualised rate of 7.2Mtpa.
During the quarter Mirabela produced 4,276 tonnes of contained nickel in concentrate, 1,316 tonnes of contained copper in concentrate, and 72 tonnes of contained cobalt in concentrate. 4,787 tonnes of nickel in concentrate was sold to Mirabela's off-take partners, Votorantim Metais Niquel S.A. and Norilsk Nickel, an increase of 15% from Q1 2012. Two export shipments to Norilsk Nickel were completed during the quarter. Going forward the company expects the timing of shipments to Norilsk Nickel to be approximately every second month. Steady deliveries to Votorantim continued throughout the quarter.
The Processing Plant 7.2Mtpa construction programme is now complete with the second crusher successfully commissioned and in ramp-up and the desliming plant operational. Construction contractors have been demobilised and all major components have been handed over to the operations team.
Exploration(Refer Competent Person Statement at the end of the report)
Mirabela is pleased to announce new drilling results including best results with composited down-hole intersections of 94m grading 0.75% nickel and 86m grading 0.61% nickel.
New Composite results from Pit Extension Drilling (1)Hole IDFrom (m)Composite down-holewidth (m)Ni%Cu%MBS-622670940.750.21MBS-627562270.510.16MBS-628641860.610.13MBS-635510250.580.18(1) 0.4% Ni cut-off grade, 4m minimum mining width
The results from these four new open pit extension drill holes, combined with the ten previously announced holes, closely match our resource interpretation and potentially substantially increase our current open pit mining resource of 198 Mt grading 0.52% nickel. The results show the continuation of the ore-body underneath the North pit and work is continuing to fully evaluate the resource potential and its amenability to the open pit.
With these new results, the Company is on track to complete an updated in-pit resource during the third quarter.
Drilling has also recommenced at Palestina under the licence requirements and the Company expects to provide first drill results during the third quarter.
A full summary of the drilling results is provided in the table below. More details of these results are set out in Appendices 1 and 2.
Composite results from Pit Extension Drilling (1)Hole IDFrom (m)Composite down-holewidth (m)Ni%Cu%MBS-622670940.750.21MBS-623492950.860.2MBS-624519420.760.19MBS-625(2)542130.530.16MBS-626691820.830.25MBS-627562270.510.16MBS-628641860.610.13MBS-629635450.860.21MBS-630438600.680.19MBS-631508660.720.16MBS-632608490.560.13MBS-63350280.540.18MBS-634464970.750.19MBS-635510250.580.18(1) 0.4% Ni cut-off grade, 4m minimum mining width(2) Fault affected - intersected fault in position ofexpected mineralized zone
Unit Cash CostsThree monthsended30 Jun 2012Three monthsended31 Mar 2012% changefavourable/(unfavourable)Year to Date2012Payable Nickel Production(1)lbs8,389,9908,330,074116,720,064Production CostsMining CostUS$/lb3.023.90233.44Processing CostsUS$/lb1.652.24261.93Administration CostUS$/lb0.580.65110.62SubtotalUS$/lb5.256.79235.99Selling CostsTransport/Shipping CostUS$/lb0.270.16(69)0.22By-Product Credit(2)US$/lb(1.45)(1.19)22(1.33)Smelter ChargesUS$/lb1.961.61(22)1.80SubtotalUS$/lb0.780.58(34)0.69C1 Unit Cash CostUS$/lb6.037.37186.68Unit Royalty CostUS$/lb0.440.41(7)0.43Realised Nickel Price(2)US$/lb8.527.49148.10Realised Copper Price(2)US$/lb3.973.14263.60Realised Cobalt Price(2)US$/lb14.0011.612113.00Average US$/Real Exchange Rate1.961.77111.87Average LME Nickel PriceUS$/lb7.788.92(13)8.36Average LME Copper PriceUS$/lb3.573.77(5)3.67(1) Average payability of 89%(2) Including prior period QP adjustments
During the quarter the Company successfully achieved its full year C1 cash unit cost guidance six months ahead of schedule. The unit cash cost for the quarter of US$6.03/lb for the quarter was a significant improvement from Q1 2012 (US$7.37/lb). The improvement was primarily driven by cost reduction initiatives successfully completed in the first quarter and the BRL softening against the USD (Q2 2012: 1.96 versus Q1 2012; 1.77). Current cost reduction and optimisation initiatives are expected to further improve unit cash costs in during the second half of the year. The Company targets C1 cash costs to be below $6.00/lb for the remainder of the year at the current exchange rate.
The Company is pleased to announce the appointment of Peter Nicholson, of Resource Capital Funds V L.P. as non-executive director of Mirabela. Mr Nicholson is a partner of RCF-V, a mining focused private equity fund which recently acquired a substantial holding in Mirabela. Mr Nicholson, a fellow of the Financial Services Industry of Australasia and Member of the AusIMM, has a strong commercial and technical background, developed over the last ten years with RCF, and prior to that, in senior technical roles within the nickel mining industry.
Mr Nicholson has a Bachelor of Engineering (Mining), holds a WA First Class Mine Manager's Certificate of Competency, a Graduate Diploma in Applied Finance and Investment and a Diploma of Financial Advising with the Securities Institute of Australia. Mr Nicholson is currently a non-executive director of Cape Alumina Ltd and Global Advanced Metals Pty Ltd and a director of Resource Capital Funds Management Pty Ltd.
Cash and Debt
As at 30 June 2012, Mirabela held balances of cash on hand and on deposit of US$166.36 million. The increase in cash on hand from 31 March 2012 (US$59.73 million) was mainly due to: proceeds from the issue of share capital of US$114.35 million (net of share issue costs); finalisation of nickel sales that occurred between December 2011 and February 2012 at an average finalisation price of US$8.88/lb compared to an average provisional price of US$8.30/lb (US$3.26 million); timing of trade receivables and other general cash flow movements.
The cash inflow was mainly offset by the expected capital expenditure of US$11.73 million; an interest payment of US$17.55 million on the senior unsecured notes and repayment of US$2.04 million relating to the Caterpillar Lease Finance Facility.
During the quarter the Company successfully raised A$120.20 million through a Strategic Placement to Resource Capital Fund V L.P. together with an accelerated 8 for 13 pro-rata non-renounceable entitlement offer. The funds raised under the Offer will strengthen Mirabela's balance sheet, and are to be used for general working capital purposes and to increase the Company's financial flexibility.
As at 30 June 2012 the Company's issued share capital consisted of 876,571,645 ordinary shares, and a balance of 4,450,000 unlisted options and 2,686,415 performance rights were outstanding.
During the quarter the Company issued 383,932,055 shares as part of the equity fund raising as follows:50,000,0000 shares were issued to Resource Capital Fund V L.P. under the $0.40 per share strategic placement;320,240,525 shares were issued to institutional investors under the $0.30 per share institutional entitlement offer;13,691,530 shares were issued to retail investors under the $0.30 per share retail entitlement offer;
A further 123,427 shares were issued as a result of the conversion of 123,427 performance rights in accordance with the Mirabela Nickel Limited Performance Rights Plan.
The Company granted 1,402,612 performance rights and cancelled 73,970 performance rights during the quarter in accordance with the Mirabela Nickel Ltd performance rights plan.
No options were exercised during the quarter.
Appendix 1: New intersections - Pit Extension drilling (0.4% Ni cut-off grade)Hole IDFrom (m)To (m)DownholewidthNi%Cu%MBS-622670689190.570.22MBS-622701742410.930.26MBS-622757768110.530.14MBS-62277478390.620.10MBS-622790800100.740.14MBS-62281481840.750.23MBS-623492.55499.67.050.700.26MBS-623513.3601.588.200.880.20MBS-62451952230.630.29MBS-624603642390.770.18MBS-625(1)542555130.530.16MBS-626691773820.830.25MBS-627562589270.510.16MBS-628641727860.610.13MBS-629635658230.680.19MBS-629669691221.060.22MBS-630438498600.680.19MBS-631508518100.560.21MBS-631542552100.630.18MBS-631568583151.100.29MBS-631609640310.620.08MBS-632608639310.590.15MBS-632667685180.500.10MBS-63350251080.540.18MBS-634464474100.740.31MBS-634525545200.920.26MBS-634553585320.680.17MBS-63462163090.520.07MBS-634635661260.780.17MBS-63551051440.590.19MBS-635555576210.570.18(1) Fault affected - intersected fault in position ofexpected mineralized zone
Appendix 2: Drill Hole Collar LocationsHole IDHole typeSurveytypeEastingNorthingRLHoleDepthDipAzimuthMBS-622Pit extensionSurveyed423082.318430730.09149.26865.52-60270MBS-623Pit extensionSurveyed422838.768431183.99162.28623.66-60270MBS-624Pit extensionSurveyed422836.658430974.96174.43673.35-60270MBS-625Pit extensionSurveyed422874.108431363.21164.54628.20-60261MBS-626Pit extensionSurveyed423053.308430851.64153.00798.83-60270MBS-627Pit extensionSurveyed422978.218431360.82171.19711.05-60270MBS-628Pit extensionSurveyed423003.838431174.98161.69762.94-60270MBS-629Pit extensionSurveyed422969.168430965.11155.14760.51-60270MBS-630Pit extensionSurveyed422820.888431275.48159.50581.28-60270MBS-631Pit extensionSurveyed422838.128431068.98172.42650.05-60270MBS-632Pit extensionSurveyed422952.198431074.07158.00741.69-60270MBS-633Pit extensionSurveyed422769.658431030.71181.05647.31-60270MBS-634Pit extensionSurveyed422847.868430730.73155.27700.51-60270MBS-635Pit extensionSurveyed422835.958430794.72158.18689.87-66292
Competent Person Statement
The information in this report that relates to Exploration Results is based on information compiled by Mr Lauritz Barnes who is a consultant to Mirabela Nickel Limited. Mr Lauritz Barnes is a Member of both The Australian Institute of Geoscientists and The Australasian Institute of Mining and Metallurgy. Mr Barnes has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Barnes consents to the inclusion in the report of the matters based on the information in the form and context in which it appears.