Minara downgrades full year forecast for Nickel

Australia’s second largest nickel producer, Minara Resources, has downgraded its full year forecast.

The group expects full year output for 2007 to be between 31,000 and 33,000 tonnes of nickel, despite having achieved an improved performance in the second quarter of 2007. (Previous forecasts stood at 32,000 to 35,000 tonnes.)

Production trends at the front end of Minara’s nickel plant are encouraging; in the three months to the end of June, it produced 7,598 tonnes of nickel compared with 6,758 tonnes in the previous quarter.

Output was also higher than the first quarter of 2007, when 7,291 tonnes of nickel were produced.

However, packaged production has been affected by scale build-up in the refinery and whilst the problem should be resolved during the third quarter, in the meantime the scale build-up has caused a bottleneck resulting in an inventory of approximately 1,000 tonnes of mixed sulphides accruing.

Minara’s Murrin Murrin plant, which use a high-pressure, acid-leaching process to exploit low-grade ore, has been dogged by expensive repairs since its commissioning, in 1999.

The mine, which is located near Leonora in Western Australia’s northern goldfields region, is a joint venture between Minara, which holds 60% of the project, and Glencore International the commodities trader.

Minara’s cheif executive and managing director, Peter Johnston, has stressed that the group continues to enjoy strong cash flow and at the end June 2007 held cash reserves of $435 million.