First Nickel to return to its roots: former producer to revive Lockerby Mine by end of year.

• Author: Stewart, Nick
• Position: MINING

Nearly two years after halting work at its Sudbury-area Lockerby Mine, First Nickel Inc. expects to be able to bring its flagship project back to life this year, with full production anticipated for the first quarter of 2012.

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The company is nearing $35 million of the roughly $50 million needed to get the mine back into production, after being on care and maintenance since the fall of 2008.

A $5-million bridge loan from Resource Capital Fund IV L.P. is already in hand, while discussions with "two major banks" for a $30-million debt facility are still underway. Once secured, this will bring First Nickel within 60 per cent of the required funds, and will make it easier for management to seek out the remainder of the necessary cash.

"It's been hard slogging at times, and while nobody has any doubts about the project's merits, money is tight," says William Anderson, president and CEO of First Nickel.

"Banks aren't particularly free and easy with their money these days, and for good reason. Once we get the debt arrangement, we can use it as a credibility thing with other institutions in order to get the rest of the financing."

If all continues as planned, work at the mine will be fully launched by November or December, with initial ore deliveries expected by mid-2011. Once ramped up to full production, the mine will bring some 100 to 120 people back to work, with production of 800 tonnes of ore per day or 280,000 tonnes a year. Grades sit around 2.7 per cent nickel "equivalent, once copper and other metals are factored in," says Anderson.

This represents more than double the production figures First Nickel had generated prior to the mine's closure, and is more along the lines of what the company had always sought to achieve.

Even if the mine hadn't been closed in 2005, production would have been curtailed just to do all the necessary development work.

"It's a much more efficient level to be producing at," he says. "We can turn a decent dollar at those levels."

Based on current reserves, the mine will run until 2016. However, as resources are converted and additional exploration work continues, Anderson expects the mine could extend "well past" that date.

In 2009, First Nickel continued with roughly $3.9...