Nickel miner Western Areas NL will expand its footprint in Canada after agreeing to fund over $5 million in exploration costs in a joint venture deal with Mustang Minerals.
The West Perth-based company will earn a 65 per cent interest by spending $C4.5 million ($A5.2 million) in two stages over five years to explore the East Bull Lake project in Canada.
Western Areas said the main purpose of the JV is to drill out a number of high quality nickel, copper and platinum group metals targets already defined at the project by Toronto-listed Mustang.
Drilling is expected to start next month.
Western Areas already holds interested in two Canadian projects, Lynn Lake and McBride Lake, with options to fully acquire both projects.
Meanwhile the company today said it on track to start up two new mines near its Flying Fox mine in Western Australia next year.
Managing director Julian Hanna told the company's annual general meeting in Perth today that these developments, the Spotted Quoll and Diggers South mines, between Kalgoorlie and Esperance, would be underpinned by a recovered nickel price.
Mr Hanna said the nickel price, which was now about $US8.50 per pound (lb), would return to its usual level of between $US10 and $US15/lb soon due to its role in the production of stainless steel, which remained in high demand.
"We don't believe that it will remain below $US10 per pound for too long," Mr Hanna said.
"At $US8 per pound it is starting to knock out some of the producers around the globe ... but about $US15 per pound, it starts to be substituted in stainless steel with chromium, manganese and that sort of thing."
Western Areas aims to be the second largest producer of nickel in Australia, behind BHP Billiton Ltd, by 2011, producing 35,000 tonnes of nickel per annum from five mines.
The company reported a loss for 2007/08 of $54.9 million.
