Timmins Nickel reduces costs, seeks more ore

Junior nickel miner Timmins Nickel (TSE) says it has substantially reduced costs at its 51% owned Redstone mine, 14 miles south of Timmins, Ont. The other 49% interest in the deposit is held by BHP-Utah Mines, a unit of BHP- Utah International. Mining and milling resumed earlier this year at the small high-grade mine following a brief curtailment of operations in February when nickel prices took an unexpected drop below US$3 per lb.

According to Timmins Nickel, unit mining costs have now been reduced to $69 per ton, down from an earlier high of $127 per ton.

During the current fiscal year, the company plans to further reduce operating costs to below US$2.75 per lb., as part of a plan to become competitive with larger nickel producers in the Sudbury area of Ontario.

Meanwhile nickel prices have recently stabilized at around US$3.91 per lb., up from an average of US$3.16 in February when mining operations were put on hold at Redstone. Operating profits during the recent quarter were $354,000, with year-to-date profits of $1.18 million.

Key production statistics for the mine during the most recent quarter are reported as follows: Year Quarter to-date Tons mined

(short dry tons) 19,353 83,074 Tons milled

(short dry tons) 8,037 74,434 Average tons per day

milled 87 204 Average grade

(% nickel+cobalt) 2.64 2.43 Concentrate grade

(% nickel) 16.8 16.8 Average recovery (%) 84.6 86.4 lb. nickel+cobalt milled

(000s) 338 3,050

The company has also entered into an agreement with Excan (1990) Mineral Exploration and Co. Partnership for up to $1 million in flow-through funds at 58 cents per share. Proceeds from the financing will be used for further exploration in the Shaw Dome area where the company has already outlined preliminary reserves of nearly 1.7 million tons grading 1.75% nickel.

The planned exploration programs will include drilling at the Langmuir north zone where a discovery hole intersected 2.41% nickel over 16 ft. Work will also focus on the Langmuir No. 1 zone which is open at depth below a previous hole that yielded 2.97% nickel over 23 ft. Drilling will also test the Tontine zone where the structure is open to the east, past a hole that yielded 5.5% nickel over 10 ft.

On the Redstone property, additional exploration is being considered for later in the year to link the top and bottom ore zones as well as to test along the ultramafic-volcanic contact.

Shares of Timmins Nickel have traded recently at around 50 cents within a 52-week trading range of 35 cents- $2.39.