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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (17469)	4/9/2008 11:00:15 PM
From: LoneClone	Read Replies (1) \| Respond to of 194204

Kagara eyes nickel mine sale to fund zinc mine reuters.com Australian miner Kagara Ltd said on Tuesday it hopes to solely fund development of one of Australia's largest known zinc deposits by selling an outback nickel prospect for up to A$1.5 billion ($1.4 billion). Kagara has long been expected to seek out a partner to develop an underground mine costing more than its entire A$950 million market capitalisation at Admiral Bay in northwestern Australia, yielding 300,000 tonnes of zinc a year. Chairman Kim Robinson told reporters at an industry conference that he would prefer to keep control of Admiral, and while he sees potential for zinc prices to rebound, he is not optimistic on the future of nickel and would sell Kagara's Australian Lounge Lizard mine to fund Admiral Bay. "Given its size, Admiral Bay has the potential to be a real company maker," Robinson said. "We want to get rid of Lounge Lizard and develop Admiral Bay." Nickel prices have dropped around 40 percent in the last 12 months, while zinc prices are down about 30 percent. Robinson sees zinc regaining ground once oversupplies are worked off, but he predicts little upside for nickel due to a rising number of low cost producers threatening to flood markets with cheaper-mined nickel. Kagara has been holding talks with firms including BHP Billiton Ltd/Plc, Teck-Cominco , Sumitomo Metal Mining, Vendanta Resources , Korea Zinc Co and Xstrata to co-develop Admiral. Kagara is aiming to identify a resource of between 50 and 75 million tonnes of zinc-bearing ore, containing between 8 and 10 percent zinc, though the actual resource could be as high as 140 million tonnes, he said. Robinson said the Lounge Lizard nickel deposit 1,300 kilometres (800 miles) to the south of Admiral could fetch around A$400 million at present. However he said its value had the potential to more than double if Kagara can confirm through further exploration that it could generate thousands of tonnes of nickel annually. "Today we could sell it for A$400 million," Robinson said, adding a price of between A$1 billion and A$1.5 billion was more realistic.