First Nickel halts output at Ontario mine on low metals prices

20th October 2008 By: Liezel Hill

TORONTO (miningweekly.com) – TSX-listed First Nickel has suspended production at its Lockerby nickel mine, in Canada's Sudbury basin, the company announced on Sunday, citing low metals prices and difficult financial conditions.

The firm is placing the mine in a care and maintenance programme, which will enable it to restart production when economic conditions improve, and while the company evaluates its options, First Nickel said in a statement.

The company will continue to explore its properties located in the Sudbury basin as well as northern and eastern Ontario.

First Nickel joins a growing list of base-metal miners who have been forced to halt or curtail production, as slumping metals prices take their toll on bottom lines.

"Regrettably, the prevailing nickel prices are below Lockerby's cash costs per pound of payable nickel even though the company has worked diligently throughout 2008 to reduce costs," said president and CEO William Anderson.

"We believe this is the best option to conserve cash and position the operation for future success while maintaining the long-term benefit to the community and our shareholders.”

An orderly suspension of all mining activity is under way, along with reductions in staff at the mine, except for a small group that will be retained to meet care and maintenance requirements.

"We greatly regret the impact that this shut-down will have on the workers who will be laid-off, and we intend to work with those who are displaced to help them relocate elsewhere in the industry," said operations VP Gerry Bilodeau.