December 9, 2009 / 3:36 PM / 9 years ago

UPDATE 1-First Quantum sees BHP nickel mine back in 18 months

* Says to begin commercial production at site in 18 months

* Says costs to restart the facility about $145 mln (In U.S. dollars unless noted)

TORONTO, Dec 9 (Reuters) - First Quantum Minerals (FM.TO), which is acquiring BHP Billiton’s (BLT.L) mothballed Ravensthorpe nickel mine in Australia, said on Wednesday it plans to begin commercial production at the site within 18 months.

Canada’s First Quantum is acquiring the mine for $340 million. Ravensthorpe is expected to produce an average of 39,000 tonnes of nickel a year for the first five years after operations restart. Overall, production over its expected 32-year life is forecast at 28,000 tonnes a year. [ID:nSYD519009]

BHP (BHP.AX) (BLT.L) spent about $2.2 billion to build the mine but shut it in January, just eight months into its life, as nickel prices MNI3 dropped to barely half the current price of around $16,100 a tonne ($7.30 per pound).

Costs to restart the mine, including working capital, will be about $145 million, First Quantum Chief Executive Philip Pascall said on a conference call.

Pascall said the company has sufficient cash to fund all of its planned projects and it has no plans to divest its stake in Equinox Minerals EQN.TO at this time. There had been market speculation that it might sell the stake to raise funds to carry out its project plans.

According to Reuters data, First Quantum had a 16.2 percent stake in Equinox as of March 2009.

First Quantum shares were down 2.6 percent at C$74.16 in morning trade on the Toronto Stock Exchange.

$1=$1.06 Canadian Reporting by Euan Rocha; editing by Peter Galloway

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