Mirabela Nickel Limited - Quarterly activity report for the period ended 30 September 2013

Mirabela Nickel Limited - Quarterly activity report for the period ended 30 
September 2013 
PERTH, Australia, Oct. 31, 2013 /CNW/ - Mirabela Nickel Limited (Mirabela or 
the Company) (ASX: MBN) announces its unaudited third quarter results for the 
period ended 30 September 2013. 

    --  Production for the quarter of 3,962 tonnes of nickel in
        concentrate (Q2 2013: 4,080 tonnes).
    --  Sales for the quarter of 2,786 tonnes of nickel in concentrate
        (Q2 2013: 4,168 tonnes).
    --  Unit cash costs of US$6.19/lb for the quarter (Q2 2013:
    --  Year to date production of 12,193 tonnes of nickel in
        concentrate at an average unit cash cost of US$5.71/lb.
    --  Average mined nickel grade of 0.41% for the quarter (Q2 2013:
        0.50%) and total mining material movement of 9.2 million tonnes
        (Q2 2013: 10.4 million tonnes).
    --  Processing plant throughput of 1.7 million tonnes (Q2 2013: 1.7
        million tonnes).
    --  Average processing plant nickel recovery of 53% (Q2 2013: 51%)
        and average nickel feed grade of 0.43% (Q2 2013: 0.47%) for the
    --  Cash on hand and on deposit of US$70 million at quarter end (Q2
        2013: US$108 million).


Mirabela's third quarter was challenging with the Brazil-wide nitrate supply 
disruption during July 2013 severely restricting mining operations during July 
and resulting in the mine being out of sequence for the duration of the 
quarter. Since the end of the quarter, the Company's operations have also been 
adversely impacted by the destabilising effect of the announcement by one of 
Mirabela's two customers, Votorantim Metais Niquel S.A. (Votorantim), relating 
to the planned closure of its smelting facilities, and subsequent events.

The Company also notes the ongoing challenging nickel market conditions with 
the LME nickel prices continuing to trade below the Company's cashflow 
break-even position after overheads, financing and capital costs. In 
addition, there has been a recent change in market analyst opinions regarding 
the likelihood of a recovery of nickel prices in early 2014 on the back of an 
expected ban of Indonesian nickel exports to China, with the market analysts 
now considering the possibility of continued weak nickel prices for 2014.

Due to these factors, the Company is currently assessing operating options to 
minimise short-term and mid-term cash outflows. The Company does not expect to 
meet the low end of its production guidance (17,000 tonnes) and is not in a 
position to provide further guidance due to the uncertainty of its current 

In addition to the items discussed above, the Company notes that it has 
identified other impairment indicators and is in the process of performing an 
impairment test on the recoverability of its assets that could result in a 
non-cash write down of the carrying value of the assets. Further detail on 
the impairment assessment will be provided once the analysis has been 


Mirabela's strong safety performance continued with no lost time injuries 
during the quarter. The Company's twelve month moving average Lost Time Injury 
Frequency Rate closed the quarter at 0.57. Mirabela continues to target 
further improvements to this strong safety record through ongoing safety 
training and safety improvement programmes, including critical risk 
inspections on thirteen key safety areas within the business.

Production Statistics
                      Three    Three months    % change
                     months                                Year to Date
                                  ended      favourable/
                      ended                                    2013
                               30 Jun 2013  (unfavourable)
                   30 Sep 2013


Total       Tonnes  9,221,753   10,387,040         (11)     28,107,075

Ore Mined   Tonnes  1,720,711    1,661,192           4       4,546,464

Nickel         %        0.41         0.50          (17)          0.46


Total Ore   Tonnes  1,753,329    1,695,559           2       5,010,851

Nickel         %        0.43         0.47           (8)          0.46

Copper         %        0.09         0.10           (9)          0.10

Cobalt         %        0.01         0.02           (4)          0.02

Nickel         %         53           51             3            53

Copper         %         71           65             9            69

Cobalt         %         27           27             2            28


Nickel in     DMT      3,962        4,080           (3)        12,193

Copper in     DMT      1,137        1,125            1          3,431

Cobalt in     DMT        71           71             -           214


Nickel in     DMT      2,786        4,168          (33)        10,860

Copper in     DMT        805        1,143          (30)         3,067

Cobalt in     DMT        51           71           (28)          192

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


Total material movement for the quarter was 9.2 million tonnes of material 
moved for 1.7 million tonnes of ore. Material movement was below expectations 
for the quarter mainly due to the nitrate supply disruption during July. The 
restricted nitrate resulted in limited mining for the month with the 
preferential mining of ore ahead of waste production. Extra contract loading 
capacity has been organised to increase the waste mining with a view to 
returning to the planned mine sequence.

Material movement was also adversely affected by poor mobile equipment 
availability, particularly the Company's front end loaders which are 
maintained by the Company's OEM endorsed service provider. The Company 
continues to explore alternatives to the current maintenance arrangements. 
U&M, Mirabela's mining service provider, also had issues with its loading 
fleet availability during the quarter.

Mine grades of 0.41% were lower than the previous quarter driven by the mine 
being out of sequence for the duration of the quarter and poor mined nickel 
grades. The improvement in ore quality expected during the third quarter 
with mining resuming in the Southern end of the pit has not been realised with 
disappointing nickel grades mined for the quarter. However, the improved MgO 
levels positively affected the plant performance during the quarter. The 
average mined nickel grade for the year (0.46%) is approximately 10% below 
expectations. The Company's grade control RC drilling programme, which 
commenced during September, is expected to improve mining dilution. The 
Company is currently completing its annual independent review of Reserves and 


During the quarter 1.7 million tonnes of ore was milled, at an average head 
grade of 0.43% nickel and achieving an average recovery of 53%. Ore quality 
limitations were the most significant constraint on nickel production levels. 
Recovery performance remained in line with expectations with recovery 
improving from the prior quarter due to lower MgO levels in the mine feed.

The marginally lower than target processing plant throughput was primarily 
driven by power supply disruption in Northeast Brazil, ongoing remediation 
work on the primary crusher and unplanned maintenance work on the SAG mill. 
Further remediation work on the Primary Crusher is scheduled for January 2014 
over a twelve day period. This work will include the redressing of concrete, 
removal and replacement of the inner chamber wear plates, removal and 
redressing of old welding seams to remove stress concentration points and the 
replacement of the eccentric bush housing which has developed a crack.

During the quarter Mirabela produced 3,962 tonnes of contained nickel in 
concentrate, 1,137 tonnes of contained copper in concentrate, and 71 tonnes of 
contained cobalt in concentrate. A total of 2,786 tonnes of nickel in 
concentrate was sold to Votorantim with no shipments to Norilsk Nickel during 
the quarter.

The planned Norilsk Nickel shipment was delayed due to new storage and 
shipping requirements at the Ilheus port imposed by the Brazilian authorities. 
The Company continues to work with the Brazilian regulators to ensure that its 
Norilsk shipments from the Ilheus port can continue by way of bagged nickel 
concentrate or an alternate port facility. The Company is also assessing the 
possibility of transporting its concentrate in half height containers.

Exploration & Studies

Exploration activity for the quarter continued to focus on tenement 
maintenance only.

Unit Cash Costs
                             Three     Three     % change
                            months    months                   Year to
                                               favourable/       Date
                             ended     ended
                                              (unfavourable)     2013
                            30 Sep    30 Jun
                             2013      2013

Payable Nickel       Lbs  7,773,887 8,005,416         (3)    23,924,029

Production Costs                                                       

Mining Cost        US$/lb    3.66      3.44           (6)        3.21

Processing Costs   US$/lb    1.59      1.69            6         1.65

Administration     US$/lb    0.53      0.65            18        0.58

Subtotal           US$/lb    5.78      5.78            -         5.44

Selling Costs                                                          

Transport/Shipping US$/lb    0.05      0.16            69        0.11

By-Product Credit( US$/lb   (0.52)    (1.42)         (63)       (1.04)

Smelter Charges    US$/lb    0.88      1.32            33        1.20

Subtotal           US$/lb    0.41      0.06         (583)        0.27

C1 Unit Cash Cost  US$/lb    6.19      5.84            6         5.71

Unit Royalty Cost  US$/lb    0.23      0.33            30        0.31

Realised Nickel    US$/lb    5.94      7.27          (18)        7.03

Realised Copper    US$/lb    2.54      2.99          (15)        2.97

Realised Cobalt    US$/lb    13.73     10.83           27       11.07

Average US$/Real             2.29      2.07            11        2.12
Exchange Rate
                  ((1))     Average payability of 89%
            ((2))     Including prior period QP adjustments

Mirabela recorded a C1 unit cash cost for the third quarter of US$6.19/lb, 
taking the average unit cash cost for the nine months ended 30 September 2013 
to US$5.71/lb. Unit cash costs for the third quarter were higher than the 
second quarter predominately due to lower production levels.

Unit processing and administration costs per payable pound improved on the 
previous quarter primarily due to various cost saving initiatives and an 
improved exchange rate. Unit mining costs per payable pound were higher in 
the third quarter primarily due to lower capitalised mining costs, lower 
payable nickel production, higher explosive costs (due to higher nitrate 
prices), higher usage of fuel and tires (due to greater average haulage 
distance) and preventative maintenance. The improved exchange rate helped to 
soften these impacts. Selling costs were also higher in the third quarter 
mostly as a result of no PGM (platinum group metals) by-product credits for 
the quarter.


Cash and Debt

Mirabela closed the third quarter with cash on hand and on deposit of US$69.77 
million. The decrease in cash on hand from 30 June 2013 (US$108.12 million) 
was driven by a combination of factors including negative cash flow from 
operations, primarily due to a lower level of sales to customers, overall 
lower nickel prices and the finalisation of nickel sales that occurred in 
October 2012 and January 2013 at an average finalisation price of US7.75/lb 
compared to an average provisional price of US7.85/lb; capital expenditure of 
US$6.90 million; the repayment of US$2.04 million relating to the Caterpillar 
finance lease facility and US$0.74 million for the Atlas Copco finance lease 
facility; and the interest payment of US$1.60 million on the working capital 
facility held with Banco Bradesco S.A. (Bradesco).

The Company's cash position continues to reduce as a result of the LME nickel 
prices continuing to trade below the Company's cashflow breakeven position 
after overheads, financing and capital costs.The Company's cash on hand 
has reduced by US$73.24 million since the commencement of the 2013 financial 
year (1 January 2013).

The cash on hand as at 29 October 2013 is US$53.66 million and concentrate 
inventory is approximately 12,500 dry metric tonne.

The Company has the following debt structures currently in place:
    --  The Company has on issue approximately US$395 million of 8.75%
        senior unsecured notes due 2018 (Notes) - bi-annual interest of
        US$17.28 million due 15 October 2013 was not paid on that date
        and the Company is currently utilising the cure period of 30
        days while it continues to assess its funding options; and
    --  The Company's subsidiary, Mirabela Mineração do Brasil Ltda,
        a)     a US$50 million facility with Bradesco which is secured
        by the Company's off-take contracts with Votorantim and Norilsk
        Nickel (Bradesco Facility) - a repayment of US$16.67 million of
        principle is due at the end of January 2014;
        b)     a US$55 million master funding and lease agreement with
        Caterpillar Financial Services Corporation.  Year to date the
        outstanding balance is US$11.23 million; and
        c)     a US$5.2 million financing facility with Atlas Copco
        Customer Finance, with an outstanding balance year to date of
        US$ 2.23 million.

As previously announced, on 26 September 2013, Votorantim provided notice that 
its concentrate sales agreement (Sales Agreement) with Mirabela would 
terminate at the end of November 2013, in conjunction with Votorantim's 
announcement of intention to close its smelting facilities. As required, 
Mirabela provided notice of this purported termination of the Sales Agreement 
to Bradesco. Following receipt of legal advice in respect of the purported 
termination of the Sales Agreement by Votorantim, discussions were held with 
Votorantim and Votorantim subsequently confirmed to the Company in writing 
that its purported termination of the Sales Agreement was invalid, that the 
Sales Agreement remains on foot, and that it intends to comply with its 
obligations under the Sales Agreement until the end of 2014. Notwithstanding 
this, the Company only expects Votorantim to procure a small amount of nickel 
concentrate from Mirabela in 2014. As this will result in a diminished 
security position to Bradesco, and potentially trigger an event of default 
through a material adverse change clause in the Bradesco Facility, Mirabela 
has agreed to grant Bradesco security over the receivables pursuant to its 
off-take agreement with Norilsk Nickel.

The Company confirms that it did not make payment of interest on 15 October 
2013, pursuant to the terms of the indenture relating to the Notes. The 
non-payment of interest pursuant to the indenture will only constitute an 
event of default if it continues for 30 days.

Share Capital

As at 30 September 2013 the Company's issued share capital consisted of 
876,801,147 ordinary shares. A balance of 400,000 unlisted options and 
5,091,810 performance rights were outstanding.

During the quarter a total of 3,750,000 options previously issued at an 
exercise price of A$3.00(US$2.80) were unexercised and as a result have 

No options were exercised during the quarter.

The Company de-listed from the Canadian Stock Exchange (TSX) on 4 October 
2013. The decision to de-list was made due to the limited trading volume of 
Mirabela's shares on the TSX over a sustained period of time and as a result 
it is not expected that maintaining the listing will deliver significant 
future value for the Company and its Canadian Shareholders.

SOURCE  Mirabela Nickel Ltd. 
Mirabela Nickel Limited Telephone: +61 8 9324 1177 info@mirabela.com.au 
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