Mirabela in nickel pact with Brazils Votorantim

SYDNEY, July 10 (Reuters) - Votorantim Metais Niquel S.A. will buy half the nickel concentrate output for five years from a mine being developed in Brazil by Mirabela Nickel Ltd MNB.TO (ASX: MBN.ax)

Shipments are scheduled to start in mid-2009, when Mirabela expects production from its Santa Rita mine to start, until the end of 2014.

Mirabela estimates initial production runs of concentrate containing around 18,500 tonnes of nickel metal a year, increasing to 25,000 tonnes within the first year of production.

At that rate, the mine should last for 14 years, according to Mirabela.

Nickel, used in stainless steel making, sells for around $21,600 a tonne currently in the London Metal Exchange three-month futures market MNI3. The price has been as high as $34,700 a tonne this year.

Construction is about 30 percent complete and on schedule, it said.

Votorantim has also agreed to provide Mirabela with a prepayment of $50 million, which will be subordinated to a $280 million bank debt facility arranged separately by Mirabela to cover construction and working costs, it said.

Mirabela also said it was in advanced negotiations to pre-sell the remaining 50 percent of production.

Votorantim, a subsidiary of the Votorantim industrial group. already yields 25,000 of nickel a year from concentrate from other sources.

Mirabela's concentrates will be smelted at Votorantim's Fortaleza de Minas plant in southeast Brazil, Mirabela said.

Mirabela's Australian-listed shares added 3.8 percent at A$5.50 on Thursday, bucking a 1.5 percent slide in the S&P/ASX 200 benchmark index JO . ($1=A$1.05) (Reporting by James Regan)

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Thu 10th July 2008 - 04:19pm