Liberty Mines gets busy at Redstone (September 12, 2005)

Vancouver — Liberty Mines (LBE-V) has received a dewatering permit for the past-producing Redstone nickel mine, located 23 km southeast of Timmins, Ont.

Once the mine is dewatered, the company plans to resume production from the underground nickel sulphide deposit. Pumping of the flooded shaft will begin soon and is expected to take about two months.

If things go as planned, Liberty would begin production in November at a rate of 400 tonnes per day. The aspiring producer hopes to produce 15,000 tonnes of nickel per year.

Liberty plans to use a scaleable mill at Redstone, one that it says could process ore from other area nickel operations.

Metallurgical testing of ore is almost finished and will aid in the design of a gravity milling circuit. Meanwhile, repairs to an existing 14-km high-voltage power line near the property are ongoing.

The company says it would use the near-term cash flow from Redstone to advance area exploration efforts. Liberty has other northeastern Ontario projects, namely the McWatters-Langmuir nickel and McAra cobalt properties.

Redstone was discovered in the late 1970s by a predecessor company to BHP Billiton (BHP-N), which later optioned the project to Timmins Nickel in 1989. Timmins Nickel developed and mined the deposit until the early-1990s when low metal prices forced it to close.

Extensive drilling in the mid-1990s by Black Hawk Mining, now part of Glencairn Gold (GGG-T), defined a deeper resource from the 750-ft. level to the 1,100-ft. level. The mine resumed production, but only for about 12 months.

Liberty acquired Redstone in 2003, from a non-arm’s length company. At the time, the project was under option to Inco (N-T), whereby the nickel giant could earn a 70% interest for cash payments of $520,000 over four years. Inco conducted drilling, geophysics and compiled previous data before turning its back on the project in late-2004. It later sold its earn-in rights to Liberty for $250,000 and 2 million shares.

Historic production from Redstone was about 275,000 tonnes grading 2.4% nickel. When it was closed in 1996, inferred resources of 182,000 tonnes grading 3.28% nickel remained above the 335-metre level. The resource pre-dates National Instrument 43-101.

In mid-2005, Liberty inked a deal with a Chinese smelting and refining company for the offtake of nickel concentrate from Redstone.

Terms of a recent financing were not disclosed. The company has 33 million shares outstanding.