First Quantum Minerals' resurrection of the Ravensthorpe nickel mine is well on track, according to the Canadian company's latest quarterly report, which said the operation in WA's south east was running at a profit despite the crash in global nickel prices this year.
The mine, built by BHP Billiton but closed just months after opening and then sold to First Quantum for $US340 million, produced 6204 tonnes of nickel last quarter.
First Quantum listed the total cost, including depreciation, interest, royalties and foreign exchange impacts, at $US6.95 per pound. Operational costs were $US5.70/lb for the quarter, well below earlier projections of $US6.60 to $US6.80/lb.
First Quantum lowered its average cash cost guidance for the year to $US6.50/lb on the back of the results, saying more savings were possible from planned improvements to the processing circuit. It said cash costs were below forecasts at Ravensthorpe because of lower than expected diesel and sulphur prices and usage.
Its average realised nickel price for the quarter was $US7.78/lb, though nickel prices were tracking at about $US7.17/lb on the London Metals Exchange yesterday.
Cobalt and nickel sales from Ravensthorpe totalled $US129.9 million ($123.6 million) for the quarter and the mine made an estimated after-tax profit of $US23.3 million for the period. For the first six months of the year the Ravensthorpe operations registered a $US32.5 million after-tax profit.
The major issue facing the mine was still the low payable nickel percentage from the concentrate produced.
Ravensthorpe produced 8053t of contained nickel during the quarter, of which only 6204t were payable.
The company had previously said the establishment of a local nickel refinery was an option "under consideration", although any decision was some time away, in order to increase payable nickel recovery to a target rate of 97 per cent.
First Quantum yesterday said various options were being explored to improve the payable nickel percentage.
The company's management was due to update investors overnight.