URSA Major starts preproduction at Shakespeare nickel mine

As nickel prices plunge below the US$7-per-lb. range and world stockpiles grow, URSA Major Minerals (UMJ-T) is taking the safe route for the time being at its Shakespeare open pit nickel project near Sudbury, Ont.

URSA has reached the preproduction phase at Shakespeare, mining at a rate of 500 tonnes per day, shipping ore to Xstrata Nickel’s Strathcona mill in Sudbury.

But in April this year, the company completed a feasibility study that said the project has enough reserves to produce at a rate of 4,500 tonnes per day. URSA agrees that building a mill is in the best interest for the company but has no immediate plans start construction.

“We are continuing our strategy of near-surface mining and processing the ore at Xstrata while reducing the investment risks associated with a major mill project,” URSA reported in its second quarter results.

According the feasibility study, the Shakespeare project has a probable reserve of 11.8 million tonnes grading 0.33% nickel, 0.35% copper, 0.02% cobalt, 0.33 gram platinum per tonne, 0.36 gram palladium and 0.18 gram gold.

During the first half of the 2008, the company shipped more than 63,000 tonnes of ore to Strathcona; nearly 45,000 tonnes was processed, bringing in revenue of $5.5 million.

URSA said it was waiting on settlements for processed ore valued at US$1.3 million based on current metal prices and another 18,600 tonnes of crushed ore stockpiled at the mill that hadn’t been treated yet.

Ore grades averaged 0.38% nickel, 0.4% copper, 0.03% cobalt, plus precious metals averaging more than 1 gram of combined precious metals per tonne.

Leading up to the June production resumption, URSA also finished a sedimentation pond for water control, truck weigh scale facilities and commissioned equipment to automatically separate a representative sample of the one-inch crushed ore prior to blending.

Prior to that, the company had delivered a 50,000 tonne bulk sample to the mill in March. Processing was delayed until May, from the original April plan, but after the first 10,000-tonne batch, it was decided that the material should be blended. Xstrata’s been blending Shakespeare’s ore at rates up to 1,000 tonnes per day.

URSA shares were up 2.5 to 16.5 today on a trading volume of 125,000 shares.