Consolidated Minerals revises FY nickel targets down on mine delay

Australian miner Consolidated Minerals Limited downgraded its full year nickel forecast but said manganese and chromite production was in line with full year guidance.

The company said it has revised its full year nickel production target down to 4,000 tonnes from a previously reported 4,600-5,000 tonnes as a result of variable ore grades and a delay in production start-up at Widgiemooltha.

In a third-quarter update, the company said manganese and chromite production, at 196,256 tonnes and 62,366 tonnes respectively, was in line with full year guidance.

The Widgiemooltha discovery is part of the company’s strategy to increase nickel production to 15,000 tonnes per year, but the project is now expected to start in early 2008 “due to timing of mining and environmental approvals,” the company said.

It will make an announcement on the revised timing for the project before the end of June 2007. As a result of both the revised targets and higher than expected spot nickel prices, the cash cost guidance for the full year has been revised to 7.25-7.75 aud per pound payable nickel, from 6.75-7.25 aud/lb.

Consolidated also announced the discovery of a high grade extension to the manganese mineralisation at its Rhodes pit and significant nickel intersections at its Beta West resource in Kambalda.

In response, Numis Securities said the new discoveries indicate the potential for future manganese and nickel production growth.

In February, the company announced a recommended takeover deal with Pallinghurst Resources and AMCI, although press speculation in Australia this week suggests there may be a counter bid in the offing.

The company said today that it now expects the bid documents to be sent to shareholders in early June, instead of the second half of April as reported at the time of the bid. At 9.53 am, shares were unchanged at 106 -1/2.

Information from: AFX via www.sharewatch.com