New gas supply interruptible: Minara

Nickel miner Minara Resources Ltd has confirmed that it shut down its Murrin Murrin operation for five days following the Varanus Island gas incident, and has disclosed its new gas supply, secured last month, is partly interruptible.

In is quarterly report, Minara said that as a result of the pipeline rupture and fire at Apache Energy Ltd's gas facility, the Murrin Murrin plant operated at two-thirds capacity over most of the June month.

Last month Minara said it had secured a long-term gas supply contract from alternative sources starting this month, but today said that a portion of the new supply is "interruptible".

Minara today said the new supply has enabled the Murrin Murrin plant to resume full production.

Nickel production over the three months to June 30, 2008, reached a total of 7268 tonnes, down from 7598t in the same period last year, while 505t of cobalt was produced, down from 551t.

Production forecasts for the year remain at 31,000-35,000t, as announced last month after the gas incident.

"Minara holds comprehensive business interruption insurance and has lodged a claim with respect to the gas supply disruption," the company said.

Meanwhile Minara said the increased cost of gas and sulphur, used to process nickel, will impact on its overall financial performance.

"... the cost of sulphur has risen sharply over the last six months. The company anticipates that the sulphur market will return to a normal price cycle in the second half of 2009," Minara said.