Quarterly Activity Report for the Period Ended 30 September 2012

PERTH, 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. 
HIGHLIGHTS 


    --  Record 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 plan
    --  Record 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
        quarter
    --  Cash on hand and on deposit of US$160 million (Q2 2012: US$166
        million) at quarter end
    --  Successful completion of the plant upgrade construction program
        during the quarter
    --  Substantial 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       Three        % change
                      months      months     favourable/   Year to Date
                      ended       ended     (unfavourable)     2012
                    30 Sep 2012 30 Jun 2012

Mining                                                              

Total        Tonnes  8,947,179  10,042,953         (11)     29,707,870
Material
Mined

Ore Mined    Tonnes  1,748,416   1,504,081           16      5,026,397

Nickel Grade    %        0.52        0.50            4           0.49
                                                                    

Processing                                                          

Total Ore    Tonnes  1,798,040   1,447,765           24      4,781,097
Processed

Nickel Grade    %        0.52        0.51            2           0.50

Copper Grade    %        0.13        0.13            -           0.13

Cobalt Grade    %        0.01        0.01            -           0.01

Nickel          %         59          58             2            58
Recovery

Copper          %         75          71             6            72
Recovery

Cobalt          %         36          35             3            35
Recovery
                                                                    

Production                                                          

Nickel in      DMT      5,441       4,276            27        13,962
Concentrate

Copper in      DMT      1,704       1,316            29         4,351
Concentrate

Cobalt in      DMT        96          72             33          244
Concentrate
                                                                    

Sales                                                               

Nickel in      DMT      5,381       4,787            12        14,323
Concentrate
((1))

Copper in      DMT      1,780       1,570            13         4,799
Concentrate
((1))

Cobalt in      DMT        92          84             10          256
Concentrate
((1))
                                                                    

((1)) Includes sales volume adjustments upon finalisation of assays.

Mining

Total 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.

Processing

During 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
                                                       
        Pit    Classification  Tonnes   Nickel grade  Copper grade (%)
                              (million)      (%)

Open Pit(1, 2)     Measured      16.0         0.50             0.10
                  Indicated      188.0        0.49             0.13
                  Sub Total      204.0        0.49             0.12

Open Pit(1, 2)     Inferred      79.6         0.56             0.15

Underground(3,     Inferred      77.0         0.78             0.22
      4)

(1) 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      Three     % change      Year to
                            months     months   favourable/       Date
                             ended      ended  (unfavourable)     2012
                             30 Sep    30 Jun
                              2012      2012

Payable Nickel        lbs 10,675,850 8,389,990          27    27,395,915
Production((1))
                                                                        

Production Costs                                                        

Mining Cost        US$/lb     2.90      3.02            4         3.23

Processing Costs   US$/lb     1.34      1.65            19        1.70

Administration     US$/lb     0.43      0.58            26        0.54
Cost

Subtotal           US$/lb     4.67      5.25            11        5.47
                                                                        

Selling Costs                                                           

Transport/Shipping US$/lb     0.20      0.27            26        0.21
Cost

By-Product Credit( US$/lb    (1.17)    (1.45)         (19)       (1.27)
(2))

Smelter Charges    US$/lb     1.68      1.96            14        1.76

Subtotal           US$/lb     0.71      0.78            9         0.70
                                                                        

C1 Unit Cash Cost  US$/lb     5.38      6.03            11        6.17

Unit Royalty Cost  US$/lb     0.35      0.44            20        0.40

Realised Nickel    US$/lb     6.54      8.52          (23)        7.51
Price((2))

Realised Copper    US$/lb     3.27      3.97          (18)        3.48
Price((2))

Realised Cobalt    US$/lb    12.00      14.00         (14)       12.00
Price((2))

Average US$/Real              2.03      1.96            4         1.92
Exchange Rate

Average LME Nickel US$/lb     7.41      7.78           (5)        8.04
Price

Average LME Copper US$/lb     3.50      3.57           (2)        3.61
Price


((1)) Average payability of 89%
((2)) Including prior period QP adjustments

The 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.

CORPORATE

Cash and Debt

As 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 Capital

As 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 Tables

The 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).

 _____________________________________________________________________
|            Criteria    |                        Explanation         |
|________________________|____________________________________________|
|                              Sampling Techniques and Data           |
|_____________________________________________________________________|
|Drilling Techniques     |All 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 Recovery   |Diamond core recovery within the ore        |
|                        |averaged 97.6%,                             |
|                        |with 98.9% of samples having a sample       |
|                        |recovery greater than 80%.                  |
|________________________|____________________________________________|
|            Logging     |Diamond core was logged into a validated    |
|                        |Excel spread sheet logging system           |
|                        |and imported into industry standard drill   |
|                        |hole database management software.          |
|                        |                                            |
|                        |All core was photographed, logged, cut,     |
|                        |sampled and is stored at Mirabela's         |
|                        |exploration office and core shed in Ipiau,  |
|                        |Bahia State, Brazil (within 5 km of         |
|                        |the Santa Rita mine).                       |
|________________________|____________________________________________|
|   Sampling techniques  |Core is oriented along the bottom of the    |
|     and preparation    |hole. All samples were taken as half        |
|                        |core using a diamond core saw.              |
|________________________|____________________________________________|
|  Quality of assay data |Quality control for all drilling was carried|
|   and laboratory tests |out involving certified reference           |
|                        |standards, field and coarse crush duplicates|
|                        |and blank samples to monitor                |
|                        |the accuracy and precision of the laboratory|
|                        |data.                                       |
|                        |                                            |
|                        |Samples were prepared and ALS Global's      |
|                        |facility in Belo Horizonte, Minas           |
|                        |Gerais State, Brazil.  Analyses were        |
|                        |determined using 4 Acid digest ICP          |
|                        |Atomic Emission Spectrometry by ALS Global's|
|                        |ISO 9001:2000                               |
|                        |accredited laboratories in Vancouver        |
|                        |(Canada), Perth (Australia) and Lima        |
|                        |(Peru).                                     |
|                        |All samples returning nickel grades greater |
|                        |than 0.6% from the ICP-AES method           |
|                        |were re-analysed using ALS's specific ore   |
|                        |grade method.  Platinum,                    |
|                        |palladium and gold grades were determined by|
|                        |30g Fire Assay with ICP-MS                  |
|                        |finish by ALS in Vancouver, Perth and Lima. |
|________________________|____________________________________________|
|     Verification of    |Umpire assay checks were also completed by  |
|  sampling and assaying |ACME Analytical Laboratory Ltd              |
|                        |(ISO 9001:2000 accredited) in Vancouver,    |
|                        |Canada, and Ultra Trace                     |
|                        |Analytical Laboratories (ISO 17025          |
|                        |accredited), in Perth, Australia.           |
|________________________|____________________________________________|
|Location of Data Points |All diamond drill holes have been located by|
|                        |DGPS with a horizontal accuracy             |
|                        |of +/-0.5m and a vertical accuracy of +/-1m,|
|                        |and subsequently surveyed by                |
|                        |contract 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 Downhole                   |
|                        |Surveys DHS Pty Ltd. using a north-seeking  |
|                        |gyroscope. The initial magnetic             |
|                        |downhole surveys were checked against the   |
|                        |gyroscope results with all                  |
|                        |matching to acceptable standard.            |
|________________________|____________________________________________|
|      Data Spacing and  |Drilling has been completed on nominal      |
|        distribution    |east-west sections with 40-60m              |
|                        |spacing to support Indicated resource       |
|                        |classification.  In areas, infill has been  |
|                        |completed to 20-25m spacing to support      |
|                        |Measured resource class and more            |
|                        |open spacing 100-120m spacing in the deeper |
|                        |parts supporting Inferred resources.        |
|________________________|____________________________________________|
|      Data Spacing and  |The vast majority of the drilling was angled|
|        distribution    |to intersect perpendicular to the           |
|                        |trend of the geology and mineralised zone.  |
|                        |Roughly 10% of the drill holes              |
|                        |were drilled at other orientations for      |
|                        |geotechnical, metallurgical sampling or     |
|                        |for testing geological and mineralisation   |
|                        |continuity.                                 |
|________________________|____________________________________________|
|                 Estimating and Reporting of  Mineral Resources      |
|_____________________________________________________________________|
|    Construction of     |A 3-D model has been constructed using      |
| geological, structural |industry standard resource                  |
|   and mineralisation   |modelling software.  Lithological contracts,|
|         models         |faults, dolerite dykes and the              |
|                        |mineralised zone were all modelled into 3-D |
|                        |wireframes then used to                     |
|                        |populate the block model and flag the       |
|                        |mineralised zone composites for use         |
|                        |in the estimation process.                  |
|________________________|____________________________________________|
|      Estimation and    |Ordinary Kriging (OK) to the parent block   |
|   modelling techniques |size (20mE x 25mN x 5mRL) was               |
|                        |used to estimate Ni, Cu, Co, Pd, Pt, Au, Fe,|
|                        |Mg and S, based on 3m                       |
|                        |composited drill hole grades. A recoverable |
|                        |Ni attribute (NiRec) calculated             |
|                        |for each composite using a regression       |
|                        |equation established from plant             |
|                        |operating data was also estimated.          |
|                        |                                            |
|                        |All data was transformed into "flattened    |
|                        |space" where the OK estimate was            |
|                        |conducted.  The estimated blocks were then  |
|                        |transformed back into their                 |
|                        |original spatial location, for reporting    |
|                        |purposes.                                   |
|                        |                                            |
|                        |Three estimation passes were used for all   |
|                        |elements with distance limits of            |
|                        |40m, 80m and 160m consecutively.  A maximum |
|                        |of 24 samples and                           |
|                        |minimum of 8 samples of which no more than 5|
|                        |were from any one hole was                  |
|                        |used for each pass. For all estimations a   |
|                        |discretisation matrix of 3x3x3 was used.    |
|________________________|____________________________________________|
|            Moisture    |Tonnes have been estimated on a dry basis.  |
|________________________|____________________________________________|
|    Cut-off parameters  |Mineral Resources have been reported using a|
|                        |recoverable nickel cut-off                  |
|                        |of 0.13%.                                   |
|________________________|____________________________________________|
|     Mining factors or  |No mining assumptions have been built into  |
|        assumptions     |the resource.                               |
|________________________|____________________________________________|
|Metallurgical factors or|No metallurgical factors or assumptions have|
|      assumptions       |been built into the resource.               |
|________________________|____________________________________________|
|         Bulk density   |16,726 core samples have been measured for  |
|                        |density from the drill holes                |
|                        |used in the modelling and resource          |
|                        |estimation.                                 |
|                        |                                            |
|                        |The method used the air dried half core     |
|                        |sample weighed in air and then              |
|                        |when 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 with              |
|                        |wax coating methods applied where necessary |
|                        |to core samples to ensure                   |
|                        |representative results.                     |
|________________________|____________________________________________|
|       Classification   |Mineral Resources have been classified on   |
|                        |the basis of confidence in the              |
|                        |geological and grade continuity using the   |
|                        |drilling density, geological model          |
|                        |and pass in which the nickel was estimated. |
|                        |                                            |
|                        |Measured Resources have been defined        |
|                        |generally in areas of 20m to 25m            |
|                        |drill spacing and in Pass 1.                |
|                        |                                            |
|                        |Indicated Resources have been defined       |
|                        |generally in areas of 40m to 60m            |
|                        |drill spacing and in Pass 2.                |
|                        |                                            |
|                        |Inferred Mineral Resources have been defined|
|                        |generally in areas of 100m to               |
|                        |120m drill spacing and in Pass 3.           |
|________________________|____________________________________________|
|         Block Model    |Swath plots were generated along east-west  |
|         Verification   |and elevation sections and the              |
|                        |block grades compared well with the         |
|                        |composite grades. Visual 3D                 |
|                        |comparisons were also completed with the    |
|                        |estimated blocks and                        |
|                        |composited drill hole data, to check that   |
|                        |the continuity and grade was                |
|                        |reflected in the estimated blocks.          |
|________________________|____________________________________________|
|     Audits or reviews  |A high level audit of the interpretation,   |
|                        |compositing, top cuts, estimation           |
|                        |modelling parameters and classifications was|
|                        |carried out by Coffey Mining.               |
|                        |No matters were noted that would impair the |
|                        |validity of the Mineral Resource Estimate.  |
|________________________|____________________________________________|

Competent Persons

The 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.



Contact Details

Bill Bent VP Business Development Telephone: +61 433 790 070 
billb@mirabela.com.au

 Ian Purdy CEO & Managing Director Telephone: +61 8 9324 1177

SOURCE: Mirabela Nickel Ltd.

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CO: Mirabela Nickel Ltd.
NI: MNG ERN 

-0- Oct/22/2012 23:58 GMT


 
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