18/06/2013 - 14:30

Metals X stops work at Wingella

18/06/2013 - 14:30

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Metals X stops work at Wingella
An artist's impression indicating mineral deposits at the Wingella nickel-cobalt project.

Metals X has become the latest Western Australian exploration play to down tools because of prevailing pessimism in the sector, suspending work on a definitive feasibility study at its Wingella nickel-cobalt project in the state’s north-east.

Chief executive Peter Cook said current economic conditions, as well as the cyclical low in nickel prices, meant a deferral of spending at Wingella was prudent.

“Wingella remains one of the largest economically viable undeveloped nickel limonite projects in the world today and a short deferral of expenditure and/or feasibility works does not change this fact,” Mr Cook said in a statement.

“Nor will it impact the reflected valuation of the asset by the market for our shareholders.”

Preliminary estimates from a feasibility study completed in 2008 put a $2.3 billion price tag to develop the mine.

Engineering group SNC-Lavalin Australia had been undertaking the Wingella feasibility study, under a contract announced in April.

Metals X also signed an agreement with global engineering and construction giant Samsung C&T in September last year to bring the mine into production, and it was expected that Samsung would be awarded the project’s main engineering contract once the DFS was complete.

At the time of announcing the DFS contract, Mr Cook shrugged off the uncertainty in nickel markets, saying the Wingella mine was a long-term prospect.

Mr Cook reiterated that position today when he announced work would be suspended.

“A short delay in the current down cycle of the market really makes no difference,” Mr Cook said.

“The project is of state and federal significance and even though the nickel price is currently depressed, this is a world-class asset that will create significant value for our shareholders in the future.”

At close of trade today, Metals X shares had slipped 4.5 per cent, at 11 cents. 

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