Mirabela Nickel Limited - Quarterly Activity Report for the Period Ended 31 March 2013

Mirabela Nickel Limited - Quarterly Activity Report for the Period Ended 31 
March 2013 
PERTH, Australia, April 23, 2013 /CNW/ - Mirabela Nickel Limited ("Mirabela" 
or the "Company") (ASX: MBN, TSX: MNB) is pleased to announce its unaudited 
first quarter results for the period ended 31 March 2013. 
HIGHLIGHTS 


    --  Production for the quarter of 4,151 tonnes of nickel in
        concentrate (Q4 2012: 5,291 tonnes)
    --  Sales for the quarter of 3,907 tonnes of nickel in concentrate
        (Q4 2012: 5,044 tonnes)
    --  Unit cash costs of US$5.10/lb for the quarter (Q4 2012:
        US$4.91/lb)
    --  Average mined nickel grade of 0.48% for the quarter (Q4 2012:
        0.55%) and total mining material movement of 8.5 million tonnes
        (Q4 2012: 8.8 million tonnes)
    --  Processing plant throughput of 1.6 million tonnes (Q4 2012: 1.7
        million tonnes)
    --  Average processing plant nickel recovery of 56% (Q4 2012: 59%)
        and average nickel feed grade of 0.47% (Q4 2012: 0.53%) for the
        quarter
    --  Cash on hand and on deposit of US$141 million at quarter end
        (Q4 2012: US$143 million)

OPERATIONS

Mirabela has completed a challenging first quarter with lower than expected 
performance in both the open pit mine and the processing plant. The open pit 
continued to be affected by excavator performance as well as access 
restrictions in the South zone, resulting in lower quality ore through the 
plant. Despite the lower production volumes, the Company successfully achieved 
unit cash costs at the lower end of guidance and managed to maintain its 
strong cash balance.

During April 2013, the Company implemented a structural change to its mining 
operations, replacing its three underperforming O&K 120 tonne excavators with 
two Hitachi 2500 excavators owned and operated by the Company's contract 
mining service provider, U&M. U&M has the second largest excavator fleet in 
Brazil and has been mining for Mirabela for the past three years, already 
performing over 30% of the Company's excavation and haulage. This change was 
driven by the continued poor performance of the O&K excavators. As part of 
this restructure Mirabela has retrenched approximately 60 personnel from the 
maintenance and stores areas.

The Company provided the following guidance for 2013: production of 22,000 to 
24,000 tonnes of nickel in concentrate; unit cash costs to average between 
US$5.00/lb and US$6.00/lb for the year; and capital expenditure, exploration 
and study costs forecast at between US$40 million and US$50 million. Year to 
date, Mirabela is approximately 2,000 tonnes of nickel production behind 
budget and as such, the lower end of the Company's 2013 production guidance is 
achievable. However, the Company will need to operate at its budgeted 
production level for the remainder of the year. The Company will assess the 
production performance after the recent changes made to the mining operations 
and provide the market with further production guidance if required. The 
Company is currently on track to achieve the lower end of both its unit cash 
cost and capital guidance due to its continued focus on cost reduction.

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 1.28. 
Mirabela is continuing to target further improvements to this strong safety 
record through ongoing safety training and safety improvement programmes.

Production Statistics
                                                                    
                       Three       Three
                      months      months       % change    Year to Date
                      ended        ended     favourable/       2013
                    31 Mar 2013 31 Dec 2012 (unfavourable)

Mining                                                              

Total        Tonnes
Material                                                     8,498,282
Mined                8,498,282   8,823,363          (4)

Ore Mined    Tonnes  1,164,561   1,764,245         (34)      1,164,561

Nickel Grade    %        0.48        0.55          (13)          0.48
                                                                    

Processing                                                          

Total Ore    Tonnes                                          1,579,963
Processed            1,579,963   1,691,798          (7)

Nickel Grade    %        0.47        0.53          (11)          0.47

Copper Grade    %        0.10        0.13          (23)          0.10

Cobalt Grade    %        0.02        0.02            -           0.02

Nickel          %                                                 56
Recovery                  56          59            (5)

Copper          %                                                 71
Recovery                  71          70             1

Cobalt          %                                                 29
Recovery                  29          34           (15)
                                                                    

Production                                                          

Nickel in      DMT                                              4,151
Concentrate             4,151       5,291          (22)

Copper in      DMT                                              1,169
Concentrate             1,169       1,507          (22)

Cobalt in      DMT                                                72
Concentrate               72          91           (21)
                                                                    

Sales                                                               

Nickel in      DMT
Concentrate                                                     3,907
((1))                   3,907       5,044          (23)

Copper in      DMT
Concentrate                                                     1,119
((1))                   1,119       1,454          (23)

Cobalt in      DMT
Concentrate                                                       69
((1))                     69          88           (22)
                                                                    

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

Mining

Total material movement for the quarter was 8.5 million tonnes of material 
moved for 1.2 million tonnes of ore. The material movement was below 
expectations for the second successive quarter mainly due to restricted 
excavator and loader availabilities. Activities undertaken to improve 
availability included: the services of a dedicated maintenance consultant; 
improved contamination control for both fuel and lubricants; improved 
housekeeping; and extended shut downs for clearing equipment maintenance 
backlogs. Despite these initiatives, excavator issues continued during the 
quarter, driven by the inability to obtain spare parts in-country for the 
problematic O&K equipment, (including hydraulic pumps), and difficulty in 
obtaining quality technical support.

During April 2013, Mirabela took definitive action to address the excavator 
issues by outsourcing its excavator operations to its contract mining service 
provider, U&M. The U&M agreement is based on a cost per tonne, incentivising 
higher availability and material movement whilst also delivering significant 
cost savings. The increase in U&M excavator volumes will be achieved by the 
addition of two Hitachi 2500 excavators, each capable of moving 1Mt of 
material per month. Mirabela has parked-up its three O&K excavators and 
terminated 60 personnel in the maintenance and stores areas. The move from 
three to two excavators is also expected to result in the open pit mining 
operations becoming less constricted, whilst still allowing for excess 
capacity within the excavator fleet together with increased flexibility in the 
production schedule. The Company will continue to operate its two CAT 994 
front-end loaders.

Mine grades of 0.48% were lower than the previous quarter primarily driven by 
the sourcing of lower grade ore from the Central zone. Access to the better 
quality ore in the South pit continues to be restricted by geotechnical 
instability in the temporary pit wall between the higher Central zone and 
lower South zone. Remedial works continued to relocate the pit access ramp and 
once complete the plan is to mine the area from the top.

Processing

During the quarter 1.6 million tonnes of ore was milled, at an average head 
grade of 0.47% nickel and achieving an average recovery of 56%. During the 
quarter low-grade stockpiled material was processed due to restricted ore 
availability in the mine. The recovery performance for the quarter was better 
than the expected grade vs. recovery algorithm for ore quality processed due 
to continued improvements in the process plant setup and the reagent regime.

The lower plant throughput was driven by several factors including: the 
reduced availability of quality ore to process; plant instability caused by 
local power failures associated with heavy rainfall; and restricted 
availability of the primary crusher. The Company is working with Metso Brazil 
and Lycopodium to assess the best course of action to improve the performance 
of its gyratory crusher with the crusher requiring major maintenance due to 
notable stress problems in the civil footings. The Company is looking to 
mitigate the poor performance of its primary crusher through improved 
performance of its second crushing line and possible deployment of mobile 
crushers.

During the quarter Mirabela produced 4,151 tonnes of contained nickel in 
concentrate, 1,169 tonnes of contained copper in concentrate, and 72 tonnes of 
contained cobalt in concentrate. 3,907 tonnes of nickel in concentrate was 
sold to Mirabela's off-take partners, Votorantim Metais Niquel S.A. and 
Norilsk Nickel. One export shipment to Norilsk Nickel was completed during the 
quarter with steady deliveries to Votorantim continuing. The next shipment to 
Norilsk Nickel is expected in late May to early June.

Exploration & Studies

Exploration activity for the quarter was focused on tenement maintenance only. 
The Company has deferred all growth activities in order to preserve cash.

Mirabela's priority remains continued production optimisation and low capital, 
incremental expansion. The Company continues to supplement its in-house 
technical capability with expert consultants, Optiro and Lycopodium. Both 
Optiro and Lycopodium have completed their initial site visits and identified 
opportunities for improvement which are undergoing further technical 
evaluation.

Unit Cash Costs
                                                               
                            Three      Three      % change
                           months      months   favourable/    Year to
                           ended       ended   (unfavourable)   Date
                           31 Mar      31 Dec                   2013
                            2013        2012

Payable Nickel       lbs  8,144,726 10,381,534        (22)    8,144,726
Production((1))
                                                                       

Production Costs                                                       

Mining Cost        US$/lb    2.50       2.41           (4)       2.50

Processing Costs   US$/lb    1.69       1.37          (23)       1.69

Administration     US$/lb    0.57       0.48          (19)       0.57
Cost

Subtotal           US$/lb    4.76       4.26          (12)       4.76
                                                                       

Selling Costs                                                          

Transport/Shipping US$/lb    0.13       0.14            7        0.13
Cost

By-Product Credit( US$/lb   (1.23)     (0.91)           35      (1.23)
(2))

Smelter Charges    US$/lb    1.44       1.42           (1)       1.44

Subtotal           US$/lb    0.34       0.65            48       0.34
                                                                       

C1 Unit Cash Cost  US$/lb    5.10       4.91           (4)       5.10

Unit Royalty Cost  US$/lb    0.40       0.37           (8)       0.40

Realised Nickel    US$/lb    7.82       7.30            7        7.82
Price((2))

Realised Copper    US$/lb    3.49       3.27            7        3.49
Price((2))

Realised Cobalt    US$/lb    9.49      11.00          (14)       9.49
Price((2))

Average US$/Real             2.00       2.06           (3)       2.00
Exchange Rate



((1))     Average payability of 89%

((2))     Including prior period QP adjustments

Mirabela recorded an excellent C1 unit cash cost for the first quarter. The 
unit cash cost result occurred despite lower nickel production (down 22%); the 
BRL strengthening slightly against the USD (Q1 2013: 2.00 versus Q4 2012: 
2.06); and significant inflationary pressures that included: an increase in 
explosive costs of 22%; diesel costs of 14%; employee food services of 11%; 
and Caterpillar service costs of 21% during the quarter. The lower unit cash 
cost was driven by: the realisation of cost reduction initiatives; reduced 
mining and processing activity costs; and higher by-product credits.

The Company recognises that its best response to the current challenging 
nickel market is its continued focus on cost reduction and production 
optimisation initiatives. The Company continues to remove and reduce costs 
from all areas of the business and this, together with an expectation of 
improving production, should underpin continuing strong unit cash cost results.

CORPORATE

Cash and Debt

As at 31 March 2013, Mirabela held balances of cash on hand and on deposit of 
US$140.80 million. The Company managed to maintain its very strong cash 
balance through disciplined cash management and reduced spending. The small 
decrease in cash on hand from 31 December 2012 (US$143.01 million) was driven 
by: budgeted capital expenditure of US$9.86 million; finalisation of nickel 
sales that occurred in June, August and September 2012 at an average 
finalisation price of US$7.37/lb compared to an average provisional price of 
US$7.40/lb (US$2.30 million); interest payments of US$1.72 million on the 
Banco Bradesco S.A. working capital facility and repayment of US$2.04 million 
relating to the Caterpillar finance lease facility; offset by positive cash 
flow from operations.

During the quarter, Mirabela successfully negotiated revised payment terms on 
its US$50 million debt facility with Banco Bradesco S.A. The revised repayment 
terms provide for three equal instalments of US$16.67 million, repayable in 
January, July and December 2014. Interest remains payable bi-annually at a 
rate of LIBOR plus 6%.

Share Capital

As at 31 March 2013 the Company's issued share capital consisted of 
876,765,094 ordinary shares. A balance of 4,150,000 unlisted options and 
1,690,582 performance rights were outstanding.

The Company issued 182,358 shares during the quarter as a result of the 
conversion of 182,358 performance rights into shares. During the quarter 
56,322 performance rights lapsed and 215,595 performance rights were cancelled 
in accordance with the Mirabela Nickel Ltd performance rights plan.

No options were exercised during the quarter.


CONTACT DETAILS 
Chris Els Chief Financial Officer & Company Secretary Telephone: +61 439 930 
333 shanik@mirabela.com.au 
Ian Purdy Chief Executive Officer & Managing Director Telephone: +61 410 491 
908 shanik@mirabela.com.au 
SOURCE: Mirabela Nickel Ltd. 
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CO: Mirabela Nickel Ltd.
NI: MNG ERN  
-0- Apr/23/2013 01:02 GMT
 
 
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