Kambalda nickel producer Mincor Resources has approved the $23 million development of its McMahon Nickel Project in Western Australia.

The project is set to increase Mincor's production by up to 18% and will help the company achieve its long-term target of 20,000 tonnes of nickel a year from 2008/09.

The McMahon Project, Mincor's seventh new mine in the Kambalda region since 2001, will add up to 3000 tonnes per annum of nickel to the company's production profile from next financial year.

The development decision follows the completion of final feasibility studies and comes just months after Mincor acquired the project as part of its $68.5 million acquisition of GMM, which also included the operating Otter Juan and Coronet mines.

Development work at McMahon has started with first production expected towards the end of the 2007/08 financial year.

It will be developed by Mincor's team at Otter Juan and run on an owner-operator basis as a subsidiary operation to Otter Juan. This structure will maximize the synergies between the operations, which lie in close proximity to each other.

Mincor's managing director David Moore says: "There is also tremendous exploration upside at McMahon. Our drilling to date has shown that the ore channel remains open down plunge, and we are confident that the existing mineral resource will grow substantially over time.

"In addition, the development will provide us with the drilling positions to target completely new discoveries at depth in this phenomenally well-endowed part of the Kambalda Nickel District."

The McMahon Project contains a delineated Mineral Resource of 373,650 tonnes at a grade of 4.1% nickel, for 15,180 tonnes of contained nickel metal.

The development requires the extension of the existing McMahon Decline and associated ventilation system. This will provide access to the McMahon and Ken Far North ore bodies and will also open up additional areas for underground exploration. Mining will take place via mechanized slot stoping methods as well as traditional Kambalda-style airleg slot-and-rill stoping, with an expected production rate of about 10,000 tonnes of ore per month at full production.

Ore from McMahon will be toll treated at BHP Billiton's Nickel West Concentrator at Kambalda, with the concentrate sold to BHP Billiton under existing off-take agreements.

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