Four days after Belvedere Resources (BEL-V) said low nickel prices had forced it to temporarily suspend development work at its Hitura nickel mine in Finland, First Nickel (FNI-T) has followed suit at its Lockerby mine in Canada.
First Nickel announced over the weekend that it is suspending production at its 100%-owned Lockerby mine and has put it on care and maintenance due to low metal prices and the “challenging financial environment.”
At press-time, nickel was trading at US$4.61 per lb. Prices for the metal have plunged 60% since the start of the year.
The company said it had analyzed mining scenarios and near-term metal price projections, all of which ruled out keeping the mine open. Management describes Lockerby, southwest of the city of Sudbury, as the “cornerstone” of its Sudbury operations.
While First Nickel has tried to cut costs this year, current nickel prices are below Lockerby’s cash costs per lb. of payable nickel, according to William Anderson, the company’s president and chief executive.
“We believe this is the best option to conserve cash,” Anderson said in a prepared statement. “The decision to put the mine on care and maintenance has not been taken lightly and the company recognizes the impact upon our employees, their families and the community. In the weeks ahead we will continue to firm up our plans and pursue ways to bring the operation back on line when conditions improve.”
First Nickel reported an updated mineral resource estimate for Lockerby in January based on a 1% nickel-equivalent cut-off grade. The deposit has an indicated resource of 2.89 million tonnes grading 1.78% nickel, 1.23% copper and 0.07% cobalt from the 65 to 72 Levels, and inferred resources of 0.38 million tonnes grading 1.37% nickel, 1.05% copper and 0.05% cobalt, below the 72 Level. The resource estimate does not include the 64 Level, which was part of the March 2007 resource estimate and was being mined.
In morning trading in Toronto, First Nickel shares were down 1.5 apiece to 4 per share, the very bottom of its 52-week trading range of 4-96 apiece. The company has 155.55 million shares outstanding.
First Nickel is focused on the Sudbury Basin in northern Ontario, the location of the Lockerby mine and four of its exploration properties. First Nickel also has two exploration properties in the Timmins region of northern Ontario.