07/07/2008 - 09:39

Falling nickel price hits Perth miners

07/07/2008 - 09:39

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The falling nickel price has hit Perth companies Fox Resources Ltd and Australian Mines Ltd, which have been forced to either wind down operations or defer capital development.

Falling nickel price hits Perth miners

The falling nickel price has hit Perth companies Fox Resources Ltd and Australian Mines Ltd, which have been forced to either wind down operations or defer capital development.

East Perth-based Fox today said it would wind down underground mining at its Radio Hill operation in WA and defer a key growth nickel project after a drop in commodity prices.

The company said it would complete underground mining and milling operations at the Radio Hill nickel and copper mine by the end of this month and defer the start of the Sholl B2 nickel project until 2009 after a drop in the nickel price.

The nickel price has declined from its record high of $US51,800 per tonne in May 2007 amid a surplus in supply for the steelmaking ingredient.

The company said it would turn its attention to exploration for iron ore, nickel and copper in the Pilbara region of WA, and work on improving the efficiency of the Radio Hill mine.

The move has been backed by the company's largest shareholder Jinchuan Group, China's largest nickel producer.

"We believe this decision will be in the best interest of shareholders and Jinchuan looks forward to supporting Fox throughout this exciting phase of growth," Jinchuan's non-executive director on the Fox board, Tian Yulong, said in a statement.

Jinchuan holds about 10.92 per cent of Fox.

Sholl B2 was described by Fox in January as a "key deposit" in the company's "developing nickel business" and was expected to come into production in the second half of calendar 2008.

Meanwhile West Perth-based Australian Mines said it would defer its capital decline development program at the Blair nickel mine near Kalgoorlie.

The decision follows the company today posting its best quarterly production result in three years of 450 tonnes of contained nickel.

"Blair's excellent production result has been partically offset by our decision to defer the capital development program," chief operating officer Brett Young said.

"However, the decision enables the company to reduce operating costs at a time of lower nickel demand, with a view to re-commencing the program down the track."

Mr Young added that the company was well positioned to maintain production levels for at least the next 12 months.

The spot nickel price is currently trading at $US9.30 per pound, however Hartleys resource analyst Andrew Muir has forecast the price to increase to $10/lb in the medium term.




 

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