Timmins Nickel mulling option on Redstone mine

Barring an unforeseen nickel rally, Timmins Nickel (TSE) will not exercise an option to purchase BHP-Utah’s 49% interest in the Redstone mine near Timmins, Ont.

The owner of a 51% stake in Redstone, Timmins Nickel has until Oct. 31 to make its intentions known. But after the company’s recent annual meeting in Toronto, Timmins Nickel President Stephen McIntyre indicated that the option would be allowed to lapse.

“With nickel trading at US$3.35 per lb. (on the day of the meeting) it doesn’t look like a great deal,” said McIntyre, who claimed that there are no plans afoot to close either Redstone or the nearby Langmuir No. 1 operation. Rather than spend $1.8 million to exercise the option, Timmins Nickel will keep the funds for a number of key projects including a $1-million exploration program focusing on the Shaw Dome structure which hosts both mines.

Starting this fall, Timmins Nickel will spend $1 million to explore some of the 21 targets established in the vicinity of Langmuir. As the Langmuir and Redstone deposits occur as long linear shoots stretching out into lateral iron formations with a belly of ultramafics, McIntyre said his company will be looking for structures with similar characteristics.

Proven and probable reserves at Redstone are sufficient to keep the operation for another three years, while Langmuir should be mined out within a year. Having obtained an option on the Dumont nickel property near Amos, Que., McIntyre said he expects a prefeasibility study to be completed within the next couple of months.

Regarded as North America’s largest undeveloped nickel deposit, Dumont hosts proven and probable reserves of 536 million tons of grade 0.39% nickel per ton. While complex metallurgy and low recovery levels have prevented the deposit from being developed so far, Timmins Nickel is attempting to devise a metallurgical process designed to achieve recoveries of 45%. However, as such a large deposit “couldn’t be developed out of petty cash,” McIntyre said his company would try to attract a major mining partner if the prefeasibility study is successful.

Meanwhile, he expects the 80% owned Dome Mountain gold property near Smithers, B.C., to enhance earnings once a milling contract has been arranged and mining commences at a rate of 250 tons per day.

Separate bulk samples have been sent to Equity Silver (TSE) and Westmin Resources (TSE) for testing and when results are available in November, Timmins Nickel and partner Habsburg Resources (VSE) can start negotiating. In the fiscal year ended May 31, Timmins Nickel reported a loss of $233,644 on revenues of $12.7 million, compared with a loss of $413,990 on revenues of $8.1 million the previous year. McIntyre said he expects this year’s earnings to be about the same as those of last year.