Mirabela Nickel, which started implementing a lower production model since late October, aims to cut nickel output from its Santa Rita open-pit mine in Brazil by 33% to 12,000 mt/year from 18,000 mt/year, it said in a statement filed to the Australian Securities Exchange Friday.
The company "believes this action to be prudent in light of continuing sustained weak nickel price."
As a result of the lower production model, Mirabela has pared its output guidance for this year to 14,500-16,000 mt of nickel in concentrate from the 16,500-18,000 mt target set earlier this year.
The company also announced that its wholly owned subsidiary Mirabela Mineracao do Brasil, or MMB, which operates the Santa Rita mine, terminated employment of about 220 employees and 180 contractors at the mine on October 22. The cut in workforce is part of MMB's decision to cut production at the Santa Rita mine in order to reduce operating costs, Mirabela noted.
"The lower production model has been developed to try and manage the operations at as close to breakeven cash position as possible over a 15-month period from October this year to December 2016," the company added.
In 2014, the company's sole producing asset -- the Santa Rita mine-- produced 12,047 mt of nickel in concentrate, 3,418 mt of copper in concentrate, and 221 mt of cobalt in concentrate.
Overall sales for the year amounted to 9,213 mt of nickel in concentrate, with 4,294 mt of the total sold to Norilsk Nickel Harjavalta Oy and the remaining 4,919 mt to an unidentified international trading house under offtake agreements.
Late last month, Mirabela appointed several administrators to protect the position of its shareholders as continuing significant decline in nickel prices eroded the company's financial position. The administrators will seek to progress discussions with financiers to put in place funding arrangements or restructuring options to alleviate the liquidity challenges currently faced by Mirabela's Santa Rita mine.
