Nickel of importance to Western Mining Corp

The company’s costly foray into Canada and the United States over a year ago hasn’t lived up to expectations, but those problems haven’t impaired its ability to pursue investment opportunities on its own turf.

Nickel continues to be the dominant commodity for the company that has replaced Falconbridge Ltd. (TSE) as the second largest holder of contained nickel reserves in the western world. New production is expected from its Leinster (Agnew) project in Western Australia during the fourth quarter and more reserves have been found there since it purchased the mine from BP Minerals and MIM Holdings. That deal was completed in January.

Overburden stripping began immediately for an open cut on the Rocky’s Reward portion of the Leinster property where reserves have increased both laterally and at depth. “We have acquired an elephant and are now working around it,” said Brian Hurley, the company’s general manager for Western Australia.

The existing plant has been upgraded and it now has a grinding capacity of one million tons per year. Rocky’s Reward has a 300,000 tonne high grade core averaging 3.4% nickel which could cover the cost of re-opening the underground mining operation shut down in 1986.

Western Mining has been particularly astute at purchasing assets in Australia and this can also be said for divestitures, including the sale of key assets in the Kalgoorlie mining camp to the Bond Group at the height of the gold boom. Bond and Homestake Mining have since rationalized their operations at Kalgoorlie and they are now attempting to expand output there and reduce unit costs.

Cash rich, the company also has an option to purchase British Petroleum’s 49% interest in the Roxby Downs gold, copper, and uranium mine in South Australia, valued by BP at approximately $800 million (A). RTZ Corp. intends to acquire the world-wide mineral assets of BP and at the time of writing it was still uncertain whether RTZ will be interested in a minority position in Roxby Downs. The refinery at Roxby Downs should be completed this quarter, enabling the processing of unrefined precious metal concentrates which have been stockpiled. In the last quarter, head grades averaged 3.9% copper, 2.4 lb uranium oxide, 0.017 oz gold, and 0.64 oz silver per ton.

North American operations have been problematic at times. Gold recoveries at the Western Hog Ranch property in Nevada have been lower than anticipated because of changes in ore composition. The mining rate has been curtailed pending a thorough review of ways to improve recoveries. At last report, mining was winding down at Seabright’s Forest Hill property in Nova Scotia, however, Western Mining is examining the possibility of resuming production at the nearby Gays River mine where Seabright’s mill is located. The mine has a serious water problem which has affected operations in the past.

Gold production from consolidated operations in Australia and North America is expected to reach more than one million ounces in the 1989/90 fiscal year.

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