Markets: Mirabela's mechanical kick

Mirabela Nickel said its operation costs rose while payable nickel production fell in the three months to June 30 at its open pit mine in Brazil. 

The company said in an ASX statement its production costs were at $US5.78 a pound in the second quarter this year compared with $US4.76 in the three months to March 31.

Explosive costs rose in the June quarter because of higher nitrate prices. There were also costs associated with staff redundancies and higher use of tyres that were not explained by the company. Ian Purdy, Mirabela Nickel’s chief executive, did not return a call seeking comment.

Payable nickel production in the three months to June was 8 million pounds compared with 8.14 million pounds in the three months to March.

“The marginally lower than target processing plant throughput was primarily driven by ongoing remediation work on the primary crusher,” Mirabela Nickel said in the ASX statement. The company says it is continuing to work on improving the performance of its crusher.

This year Mirabela Nickel expects to produce between 17,000 and 18,500 tonnes of nickel concentrate. Capital expenditure, exploration and study costs are estimated at between $US35 million and $US45 million. Unit cash costs are forecast to be between $US5 and $US6 per pound.  

The London Metal Exchange three-month rolling forward nickel contract price has dropped 18 per cent this year to $US14,070 a tonne yesterday, according to Bloomberg data. Nickel has gained 5.8 per cent on the LME since July 5.

Yesterday. Mirabela Nickel shares dropped 0.8 of a cent, or 8.8 per cent, to 8.3 cents. The stock has dropped 83 per cent this year, according to Bloomberg.