Xstrata reserves $200 million for Raglan exploration

Xstrata Nickel, subsidiary of Switzerland-based Xstrata (XTA-L), wants to nearly double output at its Raglan nickel mine in Nunavik, Quebec.

Xstrata plans to increase mine production to 2 million tonnes of ore per year from the current 1.1 million tonnes. The company hopes to reach 1.3 million tonnes by the end of 2008, but wont begin to ramp up production further until 2011.

After the expansion, Raglan will be one of the worlds largest nickel mines with output around 50,000 tonnes of contained nickel in concentrate per year.

In the meantime the company will spend about $200 million over the next 5 years on exploration so it can meet the new production target.

Xstrata has recently added 2 million tonnes of inferred resources grading 3% nickel in Zone 5-8, about 4 km east of the Katinniq zone. The total inferred resource is 10 million tonnes grading 3.2% nickel, 0.8% copper, 0.08% cobalt 0.9 grams platinum per tonne and 2.1 grams palladium per tonne.

Drill results at Zone 5-8 included a 63-metre intersection grading 4.4% nickel and 1.6% copper. Zone 5-8 has replaced Katinniq as the largest ore zone.

The Raglan mine was opened in 1997 and has been run by Xstrata Nickel since August 2006 when it took over Falconbridge. By the end of 2007, Xstrata Nickel will have spent $125 million – inlcuding $104 million to refurbish the Deception Bay wharf installations and to expand the permanent accommodation facilities.