• Australian Mines Limited
• Website: www.australianmines.com.au

Industry:

Metals & Mining

Fiscal Year-End:

Jun 08

AUZ owns 100% of the Blair Nickel Mine, just 35km south of Kalgoorlie in WA. AUZ does not have a treatment facility and ore is sold to WMC. Blair is a relatively low-grade underground mine but is capable of generating a very strong cash flow when the price of Ni is high and mine development costs low. Subject to feasibility, the Marriott’s Nickel Project will be AUZ’s second mine. Payable Ni produced in 3Q08 was 239t. The operating cost, including development, was $12.58/lb for 3Q08.

AUZ has done well to establish a cash flow from Blair to help fund exploration and grow the business. Discovery of massive sulphide ore at Area 57, a parallel structure to Blair, is typical of the Kambalda style and bodes well at current prices. The purchase of the Marriott’s Nickel Project from BHP Billiton gives AUZ a shallow resource amenable to open-pit mining. Drilling results from Marriott’s support an increase in the 0.55Mt resource grading 1.4% Ni; this should be a good project.

AUZ operates in the Materials sector. The outlook for the resources industry is closely linked to world economic growth and the supply/demand balance for raw materials. The growth in demand in Asia, particularly China, is promising for higher average commodity prices in this decade, provided new supply does not come on-stream too aggressively ahead of consumption.

AUZ's key project is the Blair nickel sulphide mine located in the heart of Western Australia's main nickel sulphide province, Kambalda. The mine produces approximately 1,400t of contained nickel per annum and, since being opened by WMC in 1989, has produced in excess of 35,000t of nickel.

Major competitors include exploration and mining companies throughout Australia and overseas. Potential customers include the industrial sector, companies in the production of ship propellers, kitchen supplies, chemical industry plumbing, armor plates and burglar-proof vaults.