First Nickel expects production at its Lockerby Mine in Sudbury for 2015 to be in line with its numbers from last year, despite recently cutting around 45 per cent of its workforce.
In early January First Nickel restructured its operations at the nickel-copper mine, and cut 75 per cent of its contractors and 30 per cent of its permanent workforce – from 164 jobs to 115.
The company stopped developing the mine's ramp about a year ago due to low nickel prices.
“As we came up to end of the year we were really forced to make a decision,” said First Nickel president and CEO Thomas Boehlert. “Either we were going to have to shut the mine by the middle of this year, or come up with a better way to go about it and reduce the cost structure, and see if we could run the business in a way that was going to open up a little bit of margin in terms of cash flow.”
Boehlert opted for the latter option, and brought in Vern Baker, who worked for FNX in Sudbury when that company faced a similar crisis. As with First Nickel, FNX reduced its workforce significantly to keep its operation afloat.
Baker met with Lockerby Mine's management team to find ways to maintain production levels with fewer workers underground.
“They came up with a plan that allowed us to fairly significantly reduce our employees, therefore our costs, while really maintaining a focus on the essential work that needs to be done,” Boehlert said.
That plan, said Boehlert, included changes in scheduling so only a small number of tasks would be performed on certain shifts – rather than having all jobs performed on every shift.
In 2014, Lockerby Mine produced approximately 13.3 million pounds of nickel, and 7.8 million pounds of copper.
The mine's operating costs were around $64.5 million that year – six per cent above its guidance range.
For this year, First Nickel expects to produce in roughly the same range, between 12.7 and 13.5 million pounds of nickel, and between 6.9 and 7.5 million pounds of copper at the mine.
The mine's operating costs – with fewer staff – is expected to be between $40 million and $45 million – roughly a 34 per cent reduction compared to the previous year.
Boehlert said the company has now continued to develop the mine's ramp, and is expected to reach the 7100 level by the first half of 2016. The ramp is currently just below the 6800 level. The ramp development is expected to extend the mine's life beyond 2016.
First Nickel will also start exploration diamond drilling at the Lockerby site.
“I think we brought the right people to the problem, and have a plan that will make the mine successful,” Boehlert said.
