Mincor Resources says it may have to close its Otter Juan nickel mine in Kambalda a year before schedule after it was forced to reduce production due to a sudden deterioration in ground conditions in the lower-most levels of the mine.
Mincor said it was unlikely that full production would be restored at Otter Juan, and it was now expected to cease operations early in the 2012 calendar year.
In 2010, Mincor had budgeted to operate the mine until early 2013.
The decision follows a series of seismic events at the bottom of the mine which damaged ground support in the drives that provide access to the lower production areas.
"It is sad to see the end coming for Kambalda's oldest producing mine," Mincor managing director David Moore said.
"However we had to act decisively following detailed and consistent expert advice from two independent consultants.
"Otter Juan is really the granddaddy of Kambalda operations and for the past decade has been run by perhaps the best underground crew in Australia/.
"Certainly from Mincor's perspective our ownership of the mine has been fantastically rewarding, and by the time it does close it will have exceeded our original expectations by several times."
At close of trade today Mincor stocks had shed 6.6 per cent to trade at $1.30.
