By Leia Michele Toovey – Exclusive to Nickel Investing News

Not much action at MCX nickel counter this week

At the MCX (India) nickel rose slightly, hitting $18.77 per kg. It opened at $18:68 per kg as compared to its previous closing of $18.61 per kg. Nickel August contract was trading up 0.58 per cent at $19.12 per kg as against its previous closing of $18.99 per kg, while it opened at $19.03 per kg. Similarly, nickel September contract was trading up 0.17 per cent at $19.34 per kg. It opened at $19.39 per kg as compared to its previous closing of $19.30 per kg.

Nickel, for three-month delivery on the London Metal Exchange, traded at $20,600 a ton, up 0.3 per cent. Overall, nickel prices are down by about 46 per cent this year. Last year, the metal had averaged approximately $37,000 per tonne, but there was an oversupply of the metal. This year, another oversupply is projected. Combine that with shrinking demand from stainless manufacturers and you have a price decline.

Despite nickel’s price crash over the year, companies are still increasing their exploration and production. Eramet’s subsidiary in New Caledonia has placed an application to mine a giant nickel deposit on the French-controlled island in the South Pacific. In May, the French court annulled a permit held by Brazil’s Companhia Vale do Rio Doce (RIO).The deposit is known to contain about 4 million metric tons of nickel ore. Eramet said it intented to establish a heap leach mining operation at the site, which it will also use to process lower grade ore from its existing Thio and Kouaoua mines. New Caledonia holds about a third of the world’s known nickel resources.

Companies making moves to improve production

Albidon Ltd is expanding their concentrator at the Munali Nickel Mine in Zambia. They have plans to increase output from a 900,000 tonnes to a 1.2 million tonnes per year. Albion is undertaking this venture because the mining operations in the region are exceeding the original output expectations with 134,662 tonnes of ore already stockpiled. The stockpile is set to be sold to Jinchuan group in China.

Brilliant Mining Corp. (TSX .V: BMC) today reported a quarterly production update from its 25 per cent owned Lanfranchi Nickel Mine, in Western Australia. In June 2008, Brilliant increased produced nickel tonnes by 64 per cent compared to June 2007. For the entire quarter, nickel metal production increased 40 per cent in 07-08 over previous year. Despite dropping prices, Brilliant intends on production ramp up forecast for 08-09 with projections indicating a further 62-69 per cent increase in contained nickel metal over the 07-08 production year. The production ramp up was due to the addition of high-grade Winner ore and the commencement of mining of the Deacon ore body. The preliminary production forecast for the Lanfranchi Mine in 2008-09 is expected to be in the range of 11,850-12,350 tonnes (26.1-27.2 million lbs) of nickel which represents a potential 62-69 per cent increase over the 2007-08 period. In 2008-09, exploration activities will be focused underground drilling in efforts to increase the known nickel reserve.

Good news for new entrant

Anxious to get into the game, Victory Nickel Inc just raised $8.1 million in a non-brokered private placement share offering.  A total 18,046,700 shares at a price of $0.45 per share were issued. Victory Nickel is a Canadian company trading on the Toronto Stock Exchange with the ticker NI. Their NI 43-101 compliant reserves include over 660,000,000 lbs of in situ Nickel located on the Thompson Nickel Belt in Manitoba, and the La Rocher deposit in Quebec. The funds raised will be used to develop the Thompson Nickel Beltand the La Rocher Deposit.

The word ‘merger’ still impacting Norilsk

Finally, an update on what happened over the week-end at Norilsk Nickel. Despite it’s poor profits, production of nickel increased in the first half. The company said that they were on track to meet their annual production target. For the year though, they are expecting a decline in copper and platinum group metals. Rumours have been rapid that there would be a Norilsk- Rusal merger; a rumour that earlier this week was squashed by the major shareholder of Rusal, Oleg Deripsaska. Rumours of the merger, however, hit Norilsk’s share value, sending it up 8.4 per cent this week, despite the news that Norilsk had a poor first half.

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