Details coming out on Preston's 3rd quarter. Cobalt production less than predicted at 58 tonnes and cash costs at US $3.71 per pound.
This from a company out of money.
Preston Says Bulong Nickel Mine at 59% Capacity (Update1)
Bloomberg News
Jan 27 2000 2:36AM ET
Preston Says Bulong Nickel Mine at 59% Capacity (Update1)
(Adds details and analyst's comment and rewrites from first paragraph.)
Perth, Australia, Jan. 27 (Bloomberg) -- Preston Resources Ltd., one of Australia's three new nickel laterite miners, said second quarter production at its Bulong mine rose to 59 percent of capacity, beating its forecasts.
Perth-based Preston, which is bringing the plant to full capacity, said the project produced 1,328 metric tons of nickel in the quarter. Design capacity is 9,000 tons a year or 2,250 tons a quarter. Cobalt output was 58 tons. The company had forecast it would produce 1,222 tons of nickel and 65 tons of cobalt.
Preston said costs were at A$12,396 per ton, or A$5.63 per pound during December. That's US$3.71 per pound -- or close to the current nickel price of around US$3.84 per pound.
``I'd say there's major problems there, cash costs should be that big,' said Keith Goode, resources analyst at Bell Securities in Sydney. ``With all these nickel laterites they're still in the `too hard' basket until they actually achieve full capacity.'
Preston's Bulong mine is one of three in Western Australia state building up to full production. They are based on orebodies known as nickel laterites and were expected to produce nickel well below the cost of operations based on traditional nickel sulphide orebodies.
The production results come as Preston has its shares suspended while it develops new financing arrangements. Earlier this month the company defaulted on its bond conditions not having enough cash set aside for loan repayments. Preston said it has no more news at this stage on the progress of its finance negotiations.
Its results will have an impact on world nickel prices, which have more than doubled since hitting an 11-year low of US$1.74 a pound, or US$3,805 per metric ton, on the London Metal Exchange in Dec. 1998. Nickel fell US$40, or 0.4 percent, to US$8,460 per metric ton yesterday.
News of delays at Bulong and the two other nickel laterite projects in Western Australia state pushed up prices as supply of the metal became tight.
The speed with which Preston, and its two rivals, Anaconda Nickel Ltd. and Centaur Mining and Exploration Ltd. can bring on their mines will probably be one of the key factors as to where nickel prices head this year.
Shares in Preston remained suspended after it requested a trading halt Oct. 25 while it refinances its operations. |
