Kambalda has run on nickel dust since it kicked off the base metals Australian boom in the 1960s.

It is now facing having virtually no nickel production in the town by February next year, with Independence Group saying reserve life extensions at the harvesting phase Long nickel mine have proved unsuccessful.

Long which delivered 2365 tonnes of nickel to the BHP Billiton Kambalda concentrator in the December quarter and RNC Minerals Beta Hunt, which is now largely a gold operation, are the only producing nickel mines in Kambalda, where a series of operations have been put on care and maintenance amid low prices for the stainless steel ingredient since 2015.

Independence Group managing director Peter Bradford, who is also grappling with lagging development at the companys flagship Nova nickel- copper mine 160km east of Norseman, said drilling at Victor West had proven unsuccessful.

It is now hoping to find extensions at Long North, but said IGO could not expand a $2 million-$3 million a year exploration budget in Kambalda unless realistic targets were found.

In the first half we were drilling at what we call Victor West, but that work didnt prove to be successful and were getting ready to do some work at Long North, he said, adding the company was revisiting 3-D seismic data from a decade ago with new technology.

So were doing that work, but being miners, we are eternally optimistic that were going to find the next Moran at Long, Mr Bradford said.

But while we continue to maintain that optimism and pursue some of these mining extension opportunities, were also pragmatic, and in parallel we continue to make sure we have closure plans and that sort of thing up to date as we are required to by law.

He told analysts on an earnings call this week IGO could spend between $5 million and $6 million on mine closure at Long if reserve life could not be extended in the next year.

The glimmer of hope for nickel producers is a slight price rise over the past year amid an expected supply deficit. Mr Bradford is forecasting a supply deficit in excess of 100,000t by the end of this year, with recent mine closures in the Philippines cancelling the potential supply flood from the relaxation of Indonesias 2014 nickel export ban.

Panoramic Resources could bring Lanfranchi back if the nickel price, $US4.90 a pound yesterday, rose above $5/lb for a substantial period.

It would be likely to bring the Savannah project in the Kimberly online first, but Mincor will have a lead time of more than a year to bring Miitel or Durkin North into production if the price is right.

BHP Nickel West, which runs the Kambalda concentrator, the Kalgoorlie nickel smelter, and the Kwinana nickel refinery, is back in the black after delivering $US37 million in underlying earnings in the first half of the financial year, a $US136 million turnaround on the $US109m loss before interest, tax, depreciation and amortisation it booked in the same period in 2015.

BHP chief executive Andrew Mackenzie said the company would hold onto the once ailing asset, just three years after it failed to find a buyer.

It continues to show examples to the rest of the organisation as to how we can drive even more safety and productivity and Im happy with it in its form within the portfolio for now, he said.

With hopes for a potential rise in the nickel price, Mr Bradford said near mine and regional exploration could become more attractive in 2018, even if Long did close.

We have not made any final decisions that far ahead, but my expectation is that in the event we werent successful in identifying reserve life extensions between now and February, we would pursue opportunities in a care-and-maintenance environment after the cessation of that reserve life, he said. The team on site is currently re-looking at some of the resource areas that may not have been viable in the past.

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Kambalda faces future with no nickel output - The West Australian