Liberty Mines scales back development at Redstone Ontario nickel mine

By The Canadian Press

EDMONTON - Liberty Mines Inc. (TSX: LBE.TO) is looking for financing alternatives and curtailing development at its Redstone nickel mine southeast of Timmins in northern Ontario.

The Edmonton-headquartered junior miner had said Sept. 29 it had negotiated a US$32-million issue of senior secured notes. It said Monday that it now is "in discussions with various lenders for financing alternatives" to that arrangement, and expects to offer details "shortly."

It added that "to respond to the poor nickel market conditions, Liberty will focus in the short term on areas underground which can be mined quickly and processed at the Redstone mill."

All development work has been curtailed underground, and an undisclosed number of employees and contractors "have been affected by this move which management views as necessary to maximize cash flow at this time."

It noted that further operational changes may be needed to reflect the nickel market and the corporation's cash flow position.

Liberty reported a second-quarter loss of $4.9 million on revenue of $4.4 million, up from no revenue a year earlier, and said it expected nickel costs of US$6.00 to US$7.25 a pound for the remainder of the year.

The current spot price is about US$4.50, down from $8.50 a month ago