UPDATE 1-CaNickel receives order to stop work at main mine in Manitoba

Wed May 16, 2012 10:23am EDT

May 16 (Reuters) - CaNickel Mining Ltd said it has been asked by Manitoba regulators to stop work at its main Bucko Lake nickel mine and the Canadian miner said it has also temporarily suspended its mill operations.

The order by Manitoba's Workplace Safety and Health Division will be in effect until an independent engineer reviewed the current mining plan and audited mining operations over the past 12 months.

The company will also need to revise the current mining plan according to the review before starting operations.

Due to weakening nickel prices and higher mining costs financially sustainable mining operations are not currently possible, the company said in a statement.

Sharp falls in industrial metals prices since August and faltering demand have prompted high-cost producers to cut output..

The company said in December it would cut output at its flagship mine by nearly a third. The company planned to reduce output at the mine in Manitoba to 400-500 tonnes per day (tpd) from 600-700 tpd.

The company shares, which had been halted since 0920 Eastern Time on Wednesday, closed at 2.5 Canadian cents on Tuesday on the Toronto Stock Exchange.

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