Minara Hopes To Fulfil Its Promise After Shutdown

Sydney Morning Herald

Friday January 11, 2008

Jamie Freed

THE nickel miner Minara Resources' confidence that its Murrin Murrin laterite plant will finally reach its nameplate capacity by the end of the year lifted its share price by 5.9 per cent yesterday.

Murrin Murrin - a joint venture between Minara and the Swiss commodities trader Glencore - produced 27,585 tonnes of nickel last year. The plant, which entered production in 1999, has never reached the 40,000 tonne-a-year production rate promised by its original promoter, Andrew Forrest.

But during the past quarter, Minara completed a seven-week shutdown for maintenance and to refurbish the acid plant that cost $100 million. Due to the shutdown, Minara produced only 6020 tonnes of nickel during the quarter ended December 31, against 8262 tonnes during the same quarter a year earlier.

Its managing director, Peter Johnston, said Minara hoped to produce 8000 to 9000 tonnes during the current quarter.

"What we're really after is steady production for the entire quarter," he said, adding that Minara should be able to produce 10,000 tonnes of nickel a quarter by the second half of the year.

The company said a worse than expected deterioration of the acid plant before the shutdown led it to miss its calendar year production forecast of 28,000 to 30,000 tonnes. The forecast had already been downgraded twice from its original range of 32,000 to 35,000 tonnes.

In its quarterly report, Minara also revealed progress with a heap leach program which could eventually double its nickel production. Minara has been testing a 2000-tonne operation before potential expansions to 10,000 tonnes and then 40,000 tonnes a year of capacity. Minara said its heap leach pads recovered 75 per cent of the nickel after 180 days, which was above the expected recovery rate.

Mr Johnston said the expansion to 10,000 tonnes, which could be approved this quarter, could cost up to $420 million. The move to 40,000 tonnes, which would require a second acid plant and an expansion of the refinery, could cost up to $1.4 billion.

He said the outlook for nickel remained strong due to Chinese demand, but predicted the metal would trade at $US25,000 to $US35,000 a tonne this year compared with record prices above $US50,000 a tonne last May.

Minara shares closed 34c higher at $6.09.

© 2008 Sydney Morning Herald

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