A Message To Other Miners

  The thumping handed out to metal prices has produced conflicting market reactions for two medium-sized miners yesterday after they provided market updates.The updates came as nickel miners were considering the impact of production cuts and delays to two new mines by Brazil's Vale. The company revealed the moves late last week in Brazil in its third quarter results.Kagara Ltd, the company with some promising mines and prospects in Queensland and Western Australia, was hammered to a near all time low of 55c.That took the fall from the all time high of & #36;6.90 in January of this year to a depressing 80%, while shares in WA nickel producer, Minara resourced bobbed up a cent to close at 36c. That was in a rough and volatile day's trading.Kagara took a major hiding from investors nervous about the implied bad news in the short update ahead of a longer quarterly report on Thursday. & quot;The September quarter saw record copper production from Kagara's North Queensland operations delivering a substantial cash operating margin of US & #36;1.76 per pound of payable copper and even at today's metal prices, the copper and zinc operations continue to be cash flow positive. & quot;However, in view of the significant deterioration in metal prices since the end of the quarter, the company is now conducting a review of capital, operations, development and exploration expenditure aimed at optimising cash flows and profits. & #160;The exploration program at the Admiral Bay project has now been completed. & quot;The results of this review will be communicated in the quarterly activities report to be released on Thursday 30 October 2008, & quot; the short statement said.Down went the shares and the continued falling through the day and ended at its low.And yet it was only a week ago that the statements from Kagara were more upbeat about the Lounge Lizard nickel prospect in WA and the Admiralty Bay project.And there was an earlier update on the performance of the company's Queensland operation. & quot;Kagara Ltd wishes to inform shareholders that a continuing shift towards copper production has resulted in record copper production of 9,472 tonnes being produced from the North Queensland operations for the September Quarter. Details will be contained in the Quarterly Activities Report to be released next week. & quot;The cash cost of production from the 7,571 tonnes produced from the Thalanga and Mt Garnet copper plants averaged US & #36;1.45 per pound of payable copper and delivered a cash margin of US & #36;1.76 per pound of payable copper. & quot;Zinc production from the polymetallic plant was 4,411 tonnes but as a result of the increased copper in the feed which averaged 1.7% copper, the cash cost was down to US & #36;0.47 cents per pound of payable zinc, delivering a cash margin of US & #36;0.25 per pound of payable zinc. & quot;These excellent results reaffirm the Mt Garnet operations as one of the lowest cost copper and zinc producers in the industry. & quot;That was a week ago today. A lot of things have changed since then, including a very sharp fall in the value of copper, and the plunge in the value of the Australian dollar, which should really be positive to the likes of Kagara.We will find out Thursday.  

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