Newspapers Discuss Prospects Of W.M.C.

Press, Volume CVIII, Issue 31584, 23 January 1968, Page 15

Newspapers Discuss Prospects Of W.M.C.

(N.Z. Press Association-Copyright) SYDNEY, January 20. The financial editors of the two Sydney morning newspapers—the “Sydney Morning Herald” and the “Daily Telegraph”—estimated the annual income from nickel for the Western Mining Corporation at s4om and s4sm respectively, based on a company statement after the formal agreement.

The “Sydney Morning Herald” financial editor said: “Western Mining’s confirmation of rumours that originated in London last week is phrased in minimal quantitative terms. . . the company’s promise to have completed by 1971 a nickel refinery with a capacity of not less than 15,000 tons of refined nickel per year does not preclude a bigger capacity." The financial editor of the “Herald,” adding up Western Mining’s expected Kwinana refinery production, including a 40,000-ton nickel metal contract over 10 years to Sumitomo of Japan and 700 tons to Canada, concluded that the annual output would be 20,000 tons a year valued at s4om on present prices. Price Pegged He warned against the “unreality” of the present free world price of nickel, which is twice that of the producer’s pegged price, at present about $1930 a ton But he said that Western Mining could reasonably conclude that its opportunities would be better the sooner it had placed itself in the world

league as a finished metal producer. The “Daily Telegraph” financial editor said that: “Provided, as seems likely, the world price of nickel sticks around $2OOO a ton, the company will have a cash flow of s4om a year from its nickel by 1971.” He suggested that the expenditure of s4sm (for refinery and housing costs) appeared to mean a considerably larger capacity than the 15,000 tons a year suggested in the report. Larger Reserves He also suggested that the company figure of 4.4 m tons of ore reserves were probably more likely to be of the order of 10m tons at Kambalda, with further exploration under Lake Lefroy in the very early stages. The present annual production rate of around 120,000 tons of ore is expected to be about quadrupled by the demands of the nickel refinery. New Process The company will probably use the refining process perfected by the Canadian company, Sherritt Gordon, which is refining about 700 tons of metal a year from concentrates already being produced at Kambalda by W.M.C. This process would make W.M.C. automatically a producer of ammonium sulphate, a nitrogenous fertiliser not now produced in Western Australia, and would also separate copper from the ore which could be sold in concentrates. W.M.C. will continue to investigate the feasibility of a smelter at Kambalda or Kaigoorlie and establish one if feasible, but this is understood to be a long time away. The company is not committed to build a smelter. Royalty Yield The Premier of Western Australia (Mr David Brand) said yesterday: “This is one of the most exciting stages in our mining history.” The State of Western Australia will receive royalties of 2 per cent of the value of the contained nickel for the first five years under the agreement, Mr Brand said today that he expected these royalties would yield the Government more than $2.5m. W.M.C. has not said how its refined metal will be sold,

but Mr Brand’s estimate of the royalties appears to be calculated from the producers’ price. W.M.C. Is Australia-owned and managed, although about 20 per cent of its 11.2 m shares are now owned in Britain including the 10 per cent holding by Selection Trust. W.M.C. also has a 20 per cent interest in the Alcoa of Australia aluminium group (which has an alumina plant at Kwinana), a half-interest in an iron ore project in Wesern Australia, and substantial holdings in gold producers Gold Mines of Kalgoorlie and Central Norseman.