PERTH (miningweekly.com) – Australian nickel-miner Mincor on Friday said that it would restart production at its flagship Miitel nickel mine, in Western Australia.

Site works at the project had restarted, with initial production set to resume as early as next month, with the ramp-up to full production expected in July this year, the company said in a statement.

MD David Moore said that steady-state production levels of between 15 000 t/m and 18 000 t/m of ore were expected, which could yield between 4 500 t/y and 5 500 t/y of nickel metal.

The Miital project was recently bolstered by the inclusion of a nearby discovery, which comprised a “maiden” ore reserve of around 148 000 t, at 2,7% nickel, for 4 000 t of nickel metal.

“Not only does this increase the existing Miital ore reserves by more than 32%, but it also provides an additional production front within the mine, increasing the overall production capacity,” Moore said.

The company would spend around A$17-million to extract the ore reserve, with most of the capital spent during the 2011 financial year.

However, Moore also warned that Australia’s recently proposed resources “super tax” could threaten the future viability of the Miital operation, which was placed on care-and-maintenance in December 2008, in response to the global financial crisis.

The company has completed an analysis to assess the impact of the proposed new tax, which Moore said indicated that, if the mine was restarted in a post-2012 tax environment, the total tax rate for the project would increase to a level of 55%, compared with the current tax rate of 41%.

The current reopening study was based on a total reserve of 616 000 t at 2,7% nickel, containing 16 4000 t of nickel metal, which would allow for an initial project life of four years. The company, however, was increasingly confident that this would grow, as a result of recent exploration success to both the north and south of the existing mine.

“However, any mine life extensions delineated through this exploration programme would fall under the new resources super tax, and hence their ability to deliver an attractive return on capital is unclear at this stage,” Moore added.

Scenario modeling conducted on the impact of the new tax regime on the Miital mine has shown that it would be advantageous to put Miitel back into production immediately, as the project will benefit from the two-year window before the new tax is fully implemented and will derive some further benefit from transitional arrangements associated with the introduction of the new tax.

Under this scenario the total tax rate is modelled at 38%.

“It is the opinion of Mincor’s management that the new tax will undermine the viability of the Australian mining industry and damage Australia’s reputation as a safe place in which to invest,” Moore said.

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