Company Snapshots – Nickel Producers in WA

Australian Mines 12-month high 29c/low 9c

Barry Cahill is managing director of Australian mines. Mr Cahill was appointed in May 2004 and was previously the executive director of operations for Perilya Limited, responsible for the Broken Hill base metal operations.

The company’s sole producing nickel deposit is its wholly owned Blair nickel mine, 20km south-east of Kalgoorlie.

The mine produced poorly in the six months to December 31, with production down 40 per cent. The company responded by deciding to replace the mining contractor with it own operation. This transition is expected to be completed in the current quarter. The grade of nickel recovered has averaged 2.79 per cent, with 768t of nickel-in-concentrate recovered, in the period. Exploration in the September quarter revealed a possible mineralisation 6km south of Blair.

BHP Billiton     12-month high $17.27/low $11.28

Charles Goodyear is the CEO of BHP Billiton. The Ravensthorpe nickel project lies near the town, and was approved in March 2004. The project includes the development of a mine, treatment plant and associated infrastructure near Ravensthorpe in WA.

The Ravensthorpe processing plant will produce a mixed nickel-cobalt hydroxide intermediate product. Development costs are estimated at $US1.05 billion, with the first shipment of MHP expected by the second quarter of 2007.

Donegal Resources Pty Ltd       12-month high/low n/a

The managing directors of Donegal Resources are brothers Ian and Lee Junk, who each own 50 per cent. The company is a private enterprise involved in nickel mining. Donegal operates the Lanfranchi mine, south of Kambalda with its 75 per cent joint venture partner Sally Malay. Donegal owns the remaining 25 per cent of the mine. The company also operates the Carnilya Hill mine for View Resources.

In January 2004, Donegal sold its 12 per cent interest in the Miitel JV, which included the Miitel, Wannaway, Redross and Mariners nickel mines in Kambalda. The mines were bought from WMC Resources in 2001.

Fox Resources            12-month high 76.1c/low 44.9c

Brett Matich is managing director of Fox Resources. Currently he is also the managing director of Aztec Resources Limited and an executive councillor of the Association of Mining and Exploration Companies (AMEC).

The company produces nickel from its wholly owned Radio Hill mine, 35km south of Karratha. Production during the December quarter totalled 2,547 wet metric tonnes of an intermediate concentrate product, containing 10 per cent nickel. 

Fox announced on January 27 that it had moved to increase its interest in the Sholl nickel deposit from 70 per cent to complete ownership of the asset. The deposit is thought to contain 39,000t of nickel. Fox aims to commence production at Sholl in 2006.

GBF Underground Mining Company             12-month high/low n/a

Michael Foulds is CEO and an owner of GBF. The company is also owned by Peter Bowman, and Ross and Linda Graham, through Carlowen Pty Ltd. In early 2001, the company acquired a 10-year lease over the Otter-Juan and Coronet North mines near Norseman from WMC. The arrangement included a long-term nickel purchase agreement. WMC suspended mining at Otter-Juan in January 1999, placing the mine on care and maintenance.

GBF reopened the Otter-Juan mines in May 2001 with the intention of producing about 10,000t per month of ore. An ore reserve estimate suggested the combined operation had a mine life of five years. By March 2004 about 14,500t per month of ore was being processed.

Independence Group  12-month high $1.41/low 85c

Christopher Bonwick is managing director of Independence Group. The producing deposit for the company is the Long nickel mine, wholly owned through its subsidiary Lightning Nickel, east of Kambalda.

In the six months to December 31 2004, Independence had mined nickel at 4.13 per cent grade to produce 4,705t of nickel-in-concentrate. The group also achieved a record $11.5 million consolidated pre-tax profit with year-to-date profit at $17.9 million.

In late November 2004, Independence acquired 19.9 per cent of Matrix Metals at a cost of $11.8 million. Matrix is an ASX listed company with considerable strategic tenement holdings in the Mt Isa/Cloncurry copper province. Matrix  is holding cash of approximately $18 million.

Jubilee Mines            12-month high $5.35/low $3.10

Kerry Harmanis is executive chairman of Jubilee Mines. Jubilee produces nickel at its Cosmos mine, which is 50km north of Leinster. December quarter production was 14,874t nickel ore mined. Mined nickel grading was 6.85 per cent for the December quarter, down from 8.67 per cent over the life of the project.

Recent exploration by Jubilee at its 60 per cent-owned Emu Lake deposit has identified high-grade massive sulphide mineralisation (up to 18 per cent). The company also entered into a medium-term equity agreement with Pioneer Nickel in September last year, allowing it to mine the Acra region, adjacent to Emu Lake.

Involvement in the Acra Project provides Jubilee with a dominant ownership position over a 140km strike length of a highly prospective ultramafic sequence.

By the end of the December quarter the company had acquired an 18.45 per cent ownership interest in Falcon Minerals, whose key asset is a 30 per cent interest in the Collurabbie Project (in joint venture with WMC Resources), which according to the company is interpreted to be a new nickel sulphide province in WA.

LionOre Australia             12-month high $7.80/lLow $5.40

Mark Ashley is managing director of LionOre Australia. The company currently produces nickel from two mines in the Lake Johnston area. The Emily Ann mine produced 2,128t of payable nickel for the September quarter last year.

In October last year LionOre Australia announced a takeover offer for MPI Mines. On January 10 MPI was de-listed on the ASX following compulsory acquisition proceedings launched by LionOre after it had acquired 94.8 per cent of the company. MPI’s key nickel assets are its 80 per cent stake in the Black Swan deposit, 53km north-east of Kalgoorlie and its Honeymoon Well development project, near Wiluna.

Minara Resources            12-month high $3.36/low $1.53

Minara Resources’ CEO is Peter Johnston. Mr Johnston joined the company as CEO in November 2001. He is an executive council member of the Chamber of Minerals and Energy, a past president of the Chamber of Minerals and Energy and immediate past president of the Nickel Development Institute. 

Minara owns a 60 per cent stake in the Murrin Murrin mine, which is 60km east of Leonora. Nickel production for the last financial year was 28,682t. This was up 4 per cent on the previous year.

Mincor Resources            12-month high $1.04/low 55c

Mincor’s managing director is David Moore, who joined Mincor in October 1999. Mincor owns and operates four small-medium sized mines in the Kambalda area.

The company produced 2900.5t of nickel-in-concentrate, up 80 per cent on the previous quarter. Production at the Redross mine commenced in August 2004. The Mariners mine became operational in mid January of this year, with production expected to exceed 1,000t. The Miitel and Wannaway nickel mines have been successfully producing since 2001.

OM Group            12-month high $37.76/low $24.10 (NYSE)

Jim Stewart is resident manager of OMG Cawse. The group is not listed on the ASX but is on the New York Stock Exchange. OM Group is a manufacturing company based in Cleveland, Ohio. The group owns and operates the Cawse nickel facility, 50km north-west of Kalgoorlie.

The company produced 11,288t of nickel-in-concentrate last quarter. OM Group did own 20 per cent of the Black Swan deposit, north-east of Kalgoorlie through MPI Nickel, which has been bought by LionOre Australia.

For the third quarter 2004, net sales were $US149.2 million and operating profit was $US20.8 million. These results reflected the benefits from higher prices that were largely offset by the effects of a stronger euro as well as lower volumes and a mechanical failure at the company’s Cawse facility in July last year.

Reliance Mining            12-month high 68c/low 31c

Paul Chapman is managing director of Reliance Mining. The Beta Hunt mine near Kambalda is currently producing nickel for Reliance. December quarter production was 1,745t of nickel-in-concentrate.

In early January Reliance received a takeover offer from Perth-based Consolidated Minerals. ConsMin offered a premium of 48 per cent over the volume-weighted average price of Reliance shares over the three month period to December 31 2004. The Reliance board has endorsed the offer.

Sally Malay Mining  12-month high $1.04/low 53c

Peter Harold is managing director of Sally Malay Mining. The miner operates the Sally Malay mine north of Halls Creek and the Lanfranchi joint venture with Donegal Resources, which operates the mine. The Lanfranchi operation mined its first ore last month. Sally Malay has a 75 per cent stake in the venture.

In late 2003 WMC tendered for sale the last of its remaining Kambalda sulphide nickel asset, the Lanfranchi Mine. In October last year, Sally Malay raised $10 million in equity for the acquisition of the Lanfranchi joint venture.

Tectonic Resources            12-month high 41c/low 22.5c

Steve Norregaard is managing director of Tectonic. The Rav8 Nickel Sulphide Mine has been operating since March 2000 and is located about 25km east of Ravensthorpe.

Tectonic acquired the project from WMC Resources in 1997. In the six months to December 31 2004 the mine produced 29,992t of nickel ore at a grade of 2.6 per cent for 779 nickel tonnes.

In October last year the company announced a new shoot of nickel ore had been discovered at the mine.

Titan Resources            12-month high 34c/low 3.5c

Jeffrey Gresham is managing director of Titan Resources. Operations at the Armstrong mine were suspended in December 2004 due to uncertainties over the acceptance of ore to WMC. Two parcels of ore delivered to the Kambalda Nickel Concentrator were rejected by WMC due to high non-sulphide nickel content.

On January 11 Titan’s directors, in consultation with the company’s external auditors, concluded there was uncertainty relating to the recoverability of the value expended on the Armstrong Project. The directors decided to write-off the $13.7 million carrying value of the Armstrong project.

Titan announced in its latest quarterly report that its Bioheap subsidiary had signed an ore leaching agreement with Sherlock Bay Nickel Corporation, which involves the provision of the technology and services to mining operations in the Pilbara.

View Resources             12-month high $1.05/low 40c

View Resources managing director is Derek Lenartowicz. The group purchased the Carnilya Hill mine in April 2003. It had previously been operated as a joint venture between WMC and BHP from 1979, and produced 1.4 million tonnes of nickel ore at a grade of 3.4 per cent prior to its closure and rehabilitation in 1998.

View entered into an alliance in September 2003 with local mining firm Donegal Mining to mine Carnilya Hill and the nearby Zone 29 prospect.

Last month View released excellent drilling results from its Carnilya Hill mine. A parallel ore body was confirmed 10 days later.

Western Areas            12-month high $1.76/low 90c

Julian Hanna is managing director of Western Areas. In mid-December of last year the company issued a release stating that mining was to commence at its Flying Fox mine.

Mine development is under way with all project approvals received for stage one of the mine. Excellent drilling results were reported for the December quarter at the site with a 9.8 per cent grade intersection at the T5 deposit.

WMC Resources            12-month high $7.70/low $4.33

WMC Resources’ CEO is Andrew Michelmore. The company’s existing nickel deposit assets are 10km north of Leinster, and at Mount Keith, which is 70km SSE of Wiluna.

In addition to mining activities, WMC owns three processing operations. These are the Kambalda Concentrator, the Kalgoorlie Nickel Smelter, and the Kwinana Nickel Refinery.

WMC produced 31,391t of nickel-in-concentrate for the December quarter. The result was up 3 per cent on the September quarter but 3 per cent down on the corresponding quarter last year. The Leinster mine achieved record annual performance.

In late October last year, Swiss-based Xstrata Capital Holdings launched a bid of $6.35 per share for WMC shares. WMC directors declared the bid inadequate and recommended a rejection of the offer. On February 2 this year, Xstrata increased its offer to $7.20 per share.