UPDATE: CaNickel Flat, Earlier Hit Yr Low on News It Plans to Reduce Operations
CaNickel Mining Ltd. (CML.TO) is flat at 4 cents, but has touched a year low of 3.5 cents and is being heavily bid down to that level again late Friday.
This comes after it announced that due to the current unfavourable nickel price, mining operations at its Bucko Lake Mine will be scaled down in order to reduce operation cost and preserve capital to complete the paste backfill plant construction and tailings facility expansion. The effect of the reduction in operations will be to reduce ore production from current 600-700 tonnes per day to 400-500 tonnes per day and this is expected to reduce the company's cash burn from $2.7 million per month to approximately $1.7 million per month and to be able to generate positive cash flow from the mine operations. The period of reduced operations is uncertain at this time.
The company also announced that it has entered into an agreement with Luckyup Investment Limited, a third party based in Hong Kong, to increase its one year term debt facility from US$15 million to US$25 million. The debt facility bears an interest rate of 12% per annum. The company intends to carry out a feasibility study to review the feasibility of upgrading existing mill circuit and flotation facility to 1,300 tonnes per day as well as commencing a study on optimizing mining methods. This later study will focus on stoping method, production sequence and schedule to mitigate ore contamination from hydraulically backfilled stopes to increase productivity and to reduce production costs. It is expected that these studies will be completed in 2012 and exact completion time for the mill upgrade is uncertain at this time.
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