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Winnipeg Free Press - PRINT EDITION

Nickel mine shuts down temporarily

Firm 'screwed up' technology

By: Martin Cash

Posted: 11/18/2009 1:00 AM | Comments: 0 (including replies)

Handout Crowflight�s Bucko Lake nickel mine will close as engineers change its mineral-extraction methods.

Manitoba's Bucko Lake nickel mine shut down this week after only nine months in operation, with operator Crowflight Minerals admitting "we screwed up" on the mineral extraction technology.

The three-month shutdown, which idles 45 people, will allow Crowflight to undertake engineering work that will effectively change the mining methods used at the nickel mine near Wabowden, just south of Thompson.

The shutdown is a setback for the provincial industry, which has been on a high, with more than half a billion dollars in new projects being announced this year alone.

Miners will pause to take stock of the developments at the Manitoba Mining and Minerals convention, which opens at the Winnipeg Convention Centre on Thursday.

Industry observers said the temporary shutdown of the $110-million Bucko Lake mine -- the newest nickel mine in the country -- was a prudent move, allowing the junior mining company to preserve capital.

In a conference call with analysts Tuesday, Stan Bharti, Toronto-based Crowflight's executive chairman, made a rare admission.

"We screwed up, no question," he said.

Among other things, Bharti said the decision to start production early this year might have been premature considering the tight financial situation the company was in and the fact some of its production systems were not fully in place.

Mark Trevisiol, Crowflight's newly appointed CEO, said the new schedule, which calls for full production in the first quarter of 2010, was the best solution.

"It was evident that to continue to run the mine as we were was not going to give us the cash flow we needed," he said.

The suspension of production at Bucko Lake was one of the few bumps in a recent spate of good news for the mining industry in Manitoba, even though exploration spending will be about half what it was last year and metal prices are not as strong as they were a couple of years ago.

The big story in Manitoba is HudBay's Lalor Lake zinc/gold discovery, already being touted as the top base-metal mine discovery in a generation in Canada.

The company has committed to $85 million worth of early development at the site near Snow Lake, making it almost a certainty it will be followed by an additional $365 million of investment over the next three years to bring the project to full production.

"The Lalor Lake project has got everybody stoked," said Chris Beaumont-Smith, manager of the province's mineral policy and business development at its Mineral Resource branch.

In addition to that massive development, HudBay has also said it would reopen its Chisel North zinc mine that's been closed for a year and the new owners of another gold mine in Snow Lake, New Britannia, have also indicated plans to reopen that mine, which has been closed since 2005.

As well, last week San Gold Corp. announced its first-ever quarterly operating profit at its Bissett gold mine.

To top it off, last month PricewaterhouseCoopers ranked Manitoba's mining tax regime as the second most competitive in the country.

"Overall, the industry is quite happy," said Ed Huebert, executive vice-president of the Mining Association of Manitoba. "We give the province full credit."

martin.cash@freepress.mb.ca

Mining in Manitoba

Annual mining industry conference runs Thursday to Saturday at the Winnipeg Convention Centre with about 1,000 people expected to attend.

$2.5 billion

including petroleum, sales generated by the mining industry in 2008

5,200

number of people employed in the industry

$70 million

amount spent on mineral exploration in 2009, about half as much as 2008

Second

Manitoba's ranking in competitive mining tax regimes in the country

Republished from the Winnipeg Free Press print edition November 18, 2009 B5

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