17/09/2020 - 14:00

Mincor approves $68m nickel restart

17/09/2020 - 14:00

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Andrew Forrest-backed Mincor Resources has approved the development of its nickel operations in Western Australia’s Kambalda region, identifying first production from December next year.

Mincor expects to begin producing in Kambalda from the December quarter of next year.

Andrew Forrest-backed Mincor Resources has approved the development of its nickel operations in Western Australia’s Kambalda region, identifying first production from December next year.

It follows a $60 million capital raising launched by Mincor in June, with the funds used to complete a final investment decision for the Kambalda restart, as well as fund resource extension and exploration drilling at Mincor's new Cassini project.

Mincor is seeking to recommence its nickel operations in Kambalda after they were suspended in 2016, due to low nickel prices.

The company recently completed a definitive feasibility study for its nickel restart strategy, which outlined pre-production capital expenditure of $68 million and a peak funding requirement of $97 million.

Mincor today said its cash reserves, together with a new $55 million debt facility signed with global banks PNB Paribas and Societe Generale, would cover the peak funding requirements.

About $40 million in cash will be used for both contingency funding and ongoing exploration programs over the next 18 months, Mincor said.

Managing director David Southam said it was a new era for WA’s Kambalda district.

He said the company’s vision was to resume its nickel sulphide mining within the region and return Kambalda to the forefront of class-one nickel production globally.

“We are doing this at a particularly exciting time in the nickel market as a new wave of nickel demand emerges, driven by the electrification of the global transport fleet and the rapid growth of the lithium-ion battery industry globally,” Mr Southam said.

“These trends have accelerated in recent months, spurred by the post-COVID government stimulus programs, and I expect that our production restart timetable will be well aligned with current market trends.”

The proposed Kambalda operations are expected to produce 71,000 tonnes of nickel and 5,000t of copper over an initial five-years, and are expected to create about 200 long-term jobs.

First ore is expected from the December quarter next year, Mincor said.

Its underground mining contractor Pit N Portal, a subsidiary of ASX-listed Emeco Holdings, said it would spend $15 million on capex in the first half of fiscal 2021 to support the project.

Pit N Portal was first contracted by Mincor in May to complete works at the Cassini site under a five-year contract, as well as at the Durkin North and Long nickel projects, also in Kambalda.

Emeco managing director Ian Testrow said Pit N Portal had already begun early site works on Mincor's Kambalda operations.

"This is a significant project for the Pit N Portal business and Emeco's expanded service offering, further supporting our strategic objective of securing long-tenured projects and considerably diversifying our commodity mix by adding a significant contribution from nickel," he said.

Emeco shares closed up 1.2 per cent to trade at 86 cents, while Mincor shares closed down 3.8 per cent to trade at 88 cents.

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