Mincor Resources has flagged its intention to rapidly restart production at its Miitel nickel mine, despite the Federal Government’s recently announced Super Profits Tax on the mining industry.
The company said the mine, based in Kambalda, Western Australia, would create 100 new jobs and generate $130 million into the State’s economy over the next four years.
However, the miner also said the new tax regime could threaten the future viability of the operation.
The company commissioned its “external tax advisers” to model a number of possible scenarios if the tax was implemented.
“In essence, the modelling shows that if the mine was developed as a completely new project under the new tax regime and without the benefit of past expenditures, the total tax rate would be a deeply unattractive 57%,” the company said.
“If the benefit of past expenditures were included, this total tax rate would reduce to a still unattractive 55%.
“This compares with the 41% income tax and royalty rate that the project would attract under existing legislation, including the benefit of past expenditures.
“However, the modelling also shows that it is advantageous to put Miitel back into production immediately, as it 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%.”
The project had been on care and maintenance since December 2008 as a result of the global financial crisis.
The company also said it would participate in the Federal Government’s consultation with the mining industry.
Initial production at the site is expected to commence early next month, with a view to ramping-up to full production in July.
The miner is predicted production rates of around 15,000 to 18,000 tonnes of ore per month, yielding between 4500 and 5500 tonnes of nickel metal in ore per annum.
Life-of-mine cash costs are estimated at between $5.50 and $6 per pound of payable nickel.