LionOre posts higher profits

Like its larger competitors, junior producer LionOre Mining International (LIM-T) has benefitted from this year’s stronger nickel prices.

For the second quarter ended June 30, LionOre posted net earnings of US$1.2 million (or US1 per share) on total revenue of US$2.9 million, compared with a net loss of US$284,938 (nil per share) on revenue of US$10.8 million in the corresponding period last year.

LionOre’s biggest moneymaker over the quarter was its 41.65% stake in the Tati Nickel operations in Botswana, which generated a profit of US$2.3 million, compared with about US$900,000 last year. LionOre attributes the improvement to higher nickel prices and operating efficiencies.

East of Francistown, Tati Nickel operates the Selkirk and Phoenix mines, selling ore from the former and concentrate from the latter for toll concentrating and smelting at BCL Ltd.’s operations, 200 km away.

The Selkirk mine, in operation since 1989, produces about 70,000 tonnes of ore annually. Phoenix, in operation since 1995, produces 120,000 tonnes of nickel concentrate but is undergoing an expansion that will double production to about 12,500 tonnes of payable nickel metal per annum.

The remainder of Tati is owned by Anglo American (AAUK-Q), with 43.35%, and the government of Botswana, with 15%.

LionOre also holds several promising nickel and gold projects in Western Australia’s Yilgarn craton.

At the early-stage Emily Ann nickel project, 540 east of Perth in the Lake Johnston greenstone belt, LionOre’s 75%-owned subsidiary, LionOre Nickel, has reached an agreement with Inco (n-t) for a long-term off-take contract.

The proposed development of Emily Ann will cost A$42 million in preproduction expenditures, with A$25 million being spent building a concentrate treatment plant and the remaining A$17 million being spent on mine development and related surface construction.

While Inco has agreed to lend LionOre Nickel A$25 million for the project, LionOre Mining says the remaining A$17 million is being lined up from separate sources.

Also during the quarter, LionOre delineated a 2.1-million-oz. gold resource (30 million tonnes of 2.2 grams gold per tonne) at its Thunderbox deposit, part of the Wildara gold-nickel project in the Northeastern Goldfields region.

A prefeasibility study is scheduled for completion during the third quarter.

LionOre holds a 60% interest in the project, with the remainder held by Australian-listed junior Dalrymple Resources.

About C$18 million was raised by a private placement of unsecured convertible debentures during the quarter, though LionOre ended the period with a deficit of US$55 million.