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Press release from CNW Group

Quarterly Activity Report for the Period Ended 30 September 2012

Monday, October 22, 2012

Quarterly Activity Report for the Period Ended 30 September 201219:58 EDT Monday, October 22, 2012PERTH, Australia, Oct. 23, 2012 /CNW/ - Mirabela Nickel Limited ("Mirabela" or the "Company") (TSX: MNB), (ASX: MBN) is pleased to announce its unaudited third quarter results for the period ended 30 September 2012.HIGHLIGHTSRecord production for the quarter of 5,441 tonnes of nickel in concentrate (up 27% from Q2 2012: 4,276 tonnes)Record sales for the quarter of 5,381 tonnes of nickel in concentrate (up 12% from Q2 2012: 4,787 tonnes)Record unit cash costs of US$5.38/lb for the quarter (down 11% from Q2 2012: US$6.03/lb)Average mined nickel grade of 0.52% for the quarter (up 4% from Q2 2012: 0.50%) and mining material movement of 8.9 million tonnes in accordance with the mine planRecord processing plant throughput of 1.8 million tonnes (up 24% from Q2 2012: 1.4 million tonnes)Average processing plant nickel recovery of 59% (Q2 2012: 58%) and average nickel feed grade of 0.52% (Q2 2012: 0.51%) for the quarterCash on hand and on deposit of US$160 million (Q2 2012: US$166 million) at quarter endSuccessful completion of the plant upgrade construction program during the quarterSubstantial increase in Open-Pit Resources to 204 Mt @ 0.49% nickel (Measured, Indicated) and 79.6 Mt @ 0.56% (Inferred)OPERATIONS Mirabela has completed a record third quarter with a second consecutive significant reduction in C1 unit cash costs and a step change increase in production post the completion of the processing plant upgrade construction program. The mine and processing plant are now running at full capacity.  The Company completed its Resource estimation showing a substantial increase in Resources on the back of the successful open pit extension exploration drilling programme completed during Q2.Mirabela remains on track to achieve towards the lower end of the production guidance of between 19,000 to 21,000 tonnes of nickel in concentrate for 2012.  Capital expenditure is within the full year guidance of US$60 million, with US$41 million spent year to date.Safety Mirabela's safety performance included two lost time injuries during the quarter. The Company's safety performance remains strong with the 12 month moving average Lost Time Injury Frequency Rate closing the quarter at 0.82, improving from 0.96 at the end of Q2 2012. Mirabela is continuing to target further improvements to this strong safety record through ongoing safety training and safety improvement programmes.Production Statistics        Three months ended 30 Sep 2012Three months ended 30 Jun 2012% changefavourable/(unfavourable)Year to Date2012Mining     Total Material MinedTonnes8,947,17910,042,953(11)29,707,870Ore MinedTonnes1,748,4161,504,081165,026,397Nickel Grade%0.520.5040.49      Processing     Total Ore ProcessedTonnes1,798,0401,447,765244,781,097Nickel Grade%0.520.5120.50Copper Grade%0.130.13-0.13Cobalt Grade%0.010.01-0.01Nickel Recovery%5958258Copper Recovery%7571672Cobalt Recovery%3635335      Production     Nickel in ConcentrateDMT5,4414,2762713,962Copper in ConcentrateDMT1,7041,316294,351Cobalt in ConcentrateDMT967233244      Sales     Nickel in Concentrate (1)DMT5,3814,7871214,323Copper in Concentrate (1)DMT1,7801,570134,799Cobalt in Concentrate (1)DMT928410256      (1) Includes sales volume adjustments upon finalisation of assays.MiningTotal material movement continues to be in line with the mine plan and processing plant feed requirements, with 8.9 million tonnes of material moved for 1.7 million tonnes of ore. Mined grades improved from 0.50% during the second quarter to an average of 0.52% during the third quarter, in line with expectations.Mining activity for the quarter continued to be predominantly in the central zone of the pit with good reconciliation between mined grades and the new resource model.  The integrated mine, plant and maintenance rolling six week mine plans are now fully operational and support the full year production guidance.Loader and Excavator availabilities continue to remain the key focus area for operational improvement.  Disciplined planned maintenance programs are continuing on all excavators and loading equipment to reduce backlogs and increase the proportion of planned maintenance hours on a sustainable basis. Steady improvements in excavators and loader availabilities are expected over the next two quarters. The drilling and truck mobile fleets performed to expectation.ProcessingDuring the quarter 1.8 million tonnes of ore was milled, at an average head grade of 0.52% nickel and achieving an average recovery of 59%. Recovery performance remains in line with the grade recovery algorithm and the quality of ore presented to the plant.  The recovery optimisation test work underway in the laboratory, pilot plant and industrial trials is focusing on improving the flotation of the coarse material fraction, with promising results achieved in the laboratory and pilot plant test work completed to date.The desliming plant was fully operational for most of the third quarter and continues to stabilise operations, recoveries and product qualities, as well as significantly reducing reagent costs. Several planned and unplanned "On / Off" tests conducted on the desliming plant reinforced the benefit of the plant with lower global recoveries achieved without desliming in all the tests conducted. During September a maintenance fire originated within the 20 inch cyclone bank of the desliming circuit, resulting in a four day unplanned shutdown.During the quarter Mirabela produced 5,441 tonnes of contained nickel in concentrate, 1,704 tonnes of contained copper in concentrate, and 96 tonnes of contained cobalt in concentrate.  5,381 tonnes of nickel in concentrate was sold to Mirabela's off-take partners, Votorantim Metais Niquel S.A. and Norilsk Nickel, an increase of 12% from Q2 2012. Two export shipments to Norilsk Nickel were completed during the quarter, with two further shipments to Norilsk Nickel expected during the fourth quarter. Steady deliveries to Votorantim continued throughout the quarter.Exploration(Refer Competent Person Statement at the end of the report)The successful completion of the Open Pit extension drilling program completed during Q2 has resulted in a significant increase in Resources.  The revised remaining Resources as at the 30th September 2012 increased to 204.0 Mt @ 0.49% nickel (Measured, Indicated) and 79.6 Mt @ 0.56% nickel (Inferred), as presented in the table below.  The current mine life of 22 years is based solely on the previously stated Reserves of 159.0 Mt @ 0.52% nickel and 0.14% copper as at the end of December 2010 and a mine rate of 7.2 Mtpa of ore.Santa Rita Deposit Resources Table - Remaining as of the End of September 2012     PitClassificationTonnes (million)Nickel grade (%)Copper grade (%)Open Pit1, 2Measured16.00.500.10 Indicated188.00.490.13 Sub Total204.00.490.12Open Pit1, 2Inferred79.60.560.15Underground3, 4Inferred77.00.780.221 Based on a cut-off grade of 0.13% recoverable nickel.2 Remaining as of end of September, 2012.3 Based on an average cut-off grade of 0.50% nickel.4 As of February 2009, re-reported using revised base of pit in October 2012.The completion of the latest resource update is based on recent deeper drilling under the northern zone of Santa Rita, (14 holes for 9,540 metres); a re-interpretation of geology and structure for the entire deposit; and use of Ordinary Kriging for the Block Model, (with no Change of Support applied). The largest increases occurred in the Indicated and Inferred classifications where Resources increased approximately 32 Mt and 54 Mt respectively.  The Underground Inferred Resources decreased by approximately 10 Mt due to some of the Underground Inferred Resource being included within the updated pit shell.The additional drilling brings the total amount of resource drilling specifically for Santa Rita to 675 holes for 190,660 metres.Unit Cash Costs        Three months ended 30 Sep 2012Threemonthsended30 Jun 2012% changefavourable/(unfavourable)Year to Date2012Payable Nickel Production(1)lbs10,675,8508,389,9902727,395,915      Production Costs     Mining CostUS$/lb2.903.0243.23Processing CostsUS$/lb1.341.65191.70Administration CostUS$/lb0.430.58260.54SubtotalUS$/lb4.675.25115.47      Selling Costs     Transport/Shipping CostUS$/lb0.200.27260.21By-Product Credit(2)US$/lb(1.17)(1.45)(19)(1.27)Smelter ChargesUS$/lb1.681.96141.76SubtotalUS$/lb0.710.7890.70      C1 Unit Cash CostUS$/lb5.386.03116.17Unit Royalty CostUS$/lb0.350.44200.40Realised Nickel Price(2)US$/lb6.548.52(23)7.51Realised Copper Price(2)US$/lb3.273.97(18)3.48Realised Cobalt Price(2)US$/lb12.0014.00(14)12.00Average US$/Real Exchange Rate 2.031.9641.92Average LME Nickel PriceUS$/lb7.417.78(5)8.04Average LME Copper PriceUS$/lb3.503.57(2)3.61(1) Average payability of 89%(2) Including prior period QP adjustmentsThe C1 unit cash cost significantly improved for the second consecutive quarter, reducing from US$7.37/lb during the first quarter to US$5.38/lb during the third quarter. The improvement on the second quarter C1 cash cost of $6.03/lb, was primarily driven by the increase in nickel production (up 27% from Q2); cost reduction and optimisation initiatives; and the BRL softening against the USD (Q3 2012: 2.03 versus Q2 2012; 1.96). The primary focus for the fourth quarter is to consolidate at the new operating platform achieved by the team over the last six months. Further cost reduction initiatives are underway with the main opportunity areas being process plant nickel recovery optimisation and improved mobile fleet efficiencies.CORPORATECash and DebtAs at 30 September 2012, Mirabela held balances of cash on hand and on deposit of US$160.19 million. The  decrease in cash on hand from 30 June 2012 (US$166.36 million) was mainly due to finalisation of nickel sales that occurred between January 2012 and March 2012 at an average finalisation price of US$8.11/lb compared to an average provisional price of US$8.82/lb (US$5.7 million).Capital expenditure of US$10.76 million was in line with expectation with the completion of the desliming and crusher projects.  During the quarter interest payments on the Banco Bradesco S.A working capital facility and interest and principal repayments on the Caterpillar and Atlas Copco finance lease facilities were made.Share CapitalAs at 30 September 2012 the Company's issued share capital consisted of 876,582,736 ordinary shares. A balance of 4,150,000 unlisted options and 2,144,857 performance rights were outstanding.The Company issued 11,091 shares during the quarter as a result of the conversion of 11,091 performance rights into shares, granted 16,209 new performance rights and cancelled 546,676 performance rights in accordance with the Mirabela Nickel Ltd performance rights plan.During the quarter 300,000 options were not exercised at the expiry date and have lapsed. Appendix 1:  Assessment and Reporting Criteria TablesThe following table provides a summary of important criteria related to the assessment and reporting of the Santa Rita Mineral Resources as presented in Table 1 of the Australian code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2004).CriteriaExplanationSampling Techniques and DataDrilling TechniquesAll 675 drill holes used in the Santa Rita resource interpretation are Diamond(predominantly NQ with some HQ and PQ) drill holes for 190,660.3m.Drill sample RecoveryDiamond core recovery within the ore averaged 97.6%,with 98.9% of samples having a sample recovery greater than 80%.LoggingDiamond core was logged into a validated Excel spread sheet logging systemand imported into industry standard drill hole database management software.All core was photographed, logged, cut, sampled and is stored at Mirabela'sexploration office and core shed in Ipiau, Bahia State, Brazil (within 5 km ofthe Santa Rita mine).Sampling techniquesand preparationCore is oriented along the bottom of the hole. All samples were taken as halfcore using a diamond core saw.Quality of assay dataand laboratory testsQuality control for all drilling was carried out involving certified referencestandards, field and coarse crush duplicates and blank samples to monitorthe accuracy and precision of the laboratory data.Samples were prepared and ALS Global's facility in Belo Horizonte, MinasGerais State, Brazil.  Analyses were determined using 4 Acid digest ICPAtomic Emission Spectrometry by ALS Global's ISO 9001:2000accredited laboratories in Vancouver (Canada), Perth (Australia) and Lima (Peru). All samples returning nickel grades greater than 0.6% from the ICP-AES methodwere re-analysed using ALS's specific ore grade method.  Platinum,palladium and gold grades were determined by 30g Fire Assay with ICP-MSfinish by ALS in Vancouver, Perth and Lima.Verification ofsampling and assayingUmpire assay checks were also completed by ACME Analytical Laboratory Ltd(ISO 9001:2000 accredited) in Vancouver, Canada, and Ultra TraceAnalytical Laboratories (ISO 17025 accredited), in Perth, Australia.Location of Data PointsAll diamond drill holes have been located by DGPS with a horizontal accuracyof +/-0.5m and a vertical accuracy of +/-1m, and subsequently surveyed bycontract and/or Mirabela surveyors.All holes had magnetic downhole surveys taken initially at 10m downhole -and then at approximately 30m intervals. For quality control purposes,approximately 100 holes were also surveyed post-drilling by DownholeSurveys DHS Pty Ltd. using a north-seeking gyroscope. The initial magneticdownhole surveys were checked against the gyroscope results with allmatching to acceptable standard.Data Spacing anddistributionDrilling has been completed on nominal east-west sections with 40-60mspacing to support Indicated resource classification.  In areas, infill has beencompleted to 20-25m spacing to support Measured resource class and moreopen spacing 100-120m spacing in the deeper parts supporting Inferred resources.Data Spacing anddistributionThe vast majority of the drilling was angled to intersect perpendicular to thetrend of the geology and mineralised zone.  Roughly 10% of the drill holeswere drilled at other orientations for geotechnical, metallurgical sampling orfor testing geological and mineralisation continuity.Estimating and Reporting of  Mineral ResourcesConstruction ofgeological, structuraland mineralisationmodelsA 3-D model has been constructed using industry standard resourcemodelling software.  Lithological contracts, faults, dolerite dykes and themineralised zone were all modelled into 3-D wireframes then used topopulate the block model and flag the mineralised zone composites for usein the estimation process.Estimation andmodelling techniquesOrdinary Kriging (OK) to the parent block size (20mE x 25mN x 5mRL) wasused to estimate Ni, Cu, Co, Pd, Pt, Au, Fe, Mg and S, based on 3mcomposited drill hole grades. A recoverable Ni attribute (NiRec) calculatedfor each composite using a regression equation established from plantoperating data was also estimated.All data was transformed into "flattened space" where the OK estimate wasconducted.  The estimated blocks were then transformed back into theiroriginal spatial location, for reporting purposes.Three estimation passes were used for all elements with distance limits of40m, 80m and 160m consecutively.  A maximum of 24 samples andminimum of 8 samples of which no more than 5 were from any one hole wasused for each pass. For all estimations a discretisation matrix of 3x3x3 was used.MoistureTonnes have been estimated on a dry basis.Cut-off parametersMineral Resources have been reported using a recoverable nickel cut-offof 0.13%. Mining factors orassumptionsNo mining assumptions have been built into the resource.Metallurgical factors orassumptionsNo metallurgical factors or assumptions have been built into the resource.Bulk density16,726 core samples have been measured for density from the drill holesused in the modelling and resource estimation.The method used the air dried half core sample weighed in air and thenwhen immersed in water, the results of which were used to estimate the density.Samples were selected from the oxide zone through to the fresh zone withwax coating methods applied where necessary to core samples to ensurerepresentative results.ClassificationMineral Resources have been classified on the basis of confidence in thegeological and grade continuity using the drilling density, geological modeland pass in which the nickel was estimated.Measured Resources have been defined generally in areas of 20m to 25mdrill spacing and in Pass 1.Indicated Resources have been defined generally in areas of 40m to 60mdrill spacing and in Pass 2.Inferred Mineral Resources have been defined generally in areas of 100m to120m drill spacing and in Pass 3.Block ModelVerificationSwath plots were generated along east-west and elevation sections and theblock grades compared well with the composite grades. Visual 3Dcomparisons were also completed with the estimated blocks andcomposited drill hole data, to check that the continuity and grade wasreflected in the estimated blocks. Audits or reviewsA high level audit of the interpretation, compositing, top cuts, estimationmodelling parameters and classifications was carried out by Coffey Mining.No matters were noted that would impair the validity of the Mineral Resource Estimate.Competent PersonsThe information in this report that relates to the updated October 2012 Mineral Resources for the Santa Rita Nickel Deposit is based on information compiled by Mr. Lauritz Barnes and reviewed by Mr. Doug Corley.Mr. Barnes is a Member of the Australian Institute of Geoscientists, and is a Consultant to Mirabela Nickel Limited.Mr. Corley is a Member of the Australian Institute of Geoscientists and is a Registered Professional Geoscientist in the field of Mining (Registration Number 10109), and is employed as a Principal Resource Consultant with Coffey Mining Pty Limited.Messrs. Barnes and Corley qualify as both a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' (JORC Code) and as a Qualified Person in accordance with NI 43‐101. Each is independent of Mirabela Nickel Limited within the meaning of NI 43-101. Messrs. Barnes and Corley have verified the data underlying the disclosures in this announcement. Messrs. Barnes and Corley approve and consent to the inclusion in the presentation of the matters and defined Resources information based on their information in the form and context in which it appears. SOURCE: Mirabela Nickel Ltd.For further information: Contact Details Bill Bent VP Business Development Telephone: +61 433 790 070  Ian Purdy CEO & Managing Director Telephone: +61 8 9324 1177