Berong Nickel Stops Production

Berong Nickel Corporation production dipped down to only 16,279 tons of ore for the fourth quarter of 2008.Production was reduced in response to the increasing stock levels, deteriorating markets and onset of the non-shipping window.

In October to February, laterite ore shipments are difficult due to rough sea conditions, making loading unsafe.

In a disclosure to the Philippine Stock Exchange, Atlas Consolidated Mining and Development Corporation reported that a total of 47,995 wet metric tons of nickel laterite ore was shipped to BHP Billiton in Australia last October at an average grade of 1.54% nickel (approximately 492 tons contained nickel on a dry basis) and 34.13% iron. Production and shipping volumes for the full year 2008 was 476,850 tons (53,000 tons lower than 2007).

The Chinese market for laterite ore declined and is expected to remain depressed well into 2009. This is an expected response to the continued depressed LME nickel prices. Anecdotal evidences suggest more than eight million tons of laterite ore currently stockpiled at Chinese ports.

The markets for both the blast furnace process and the electric arc furnace process have been impacted with reports that over 90% of the production capacity have been shut down. Chinese imports for the last quarter are expected to be less than 1.5 million tons, a large portion of which is low grade nickel laterite( <0.9% Nickel) with high iron content which substitutes for higher priced iron ore feed.

Berong is partially insulated from bad Chinese market conditions by BHP Billiton ore supply contract, which provides for supply of up to 500,000 tons per annum of nickel laterite ore until 2013. Negotiations to increase the sales volume to 1MM tons per annum were unsuccessful, with BHP Billiton allocating only 400,000 tons for the entire 2009. Half of this volume can be supplied from presently existing stockpiles, which means full scale mining operations can be deferred until the second half of 2009.

With more than enough stocks to meet the initial shipments to BHP Billiton, all
production activity at Berong has ceased for the time being. Less than 50 people are currently employed at the mine site. The downsizing left more than 600 employees and contractors unemployed in a region with little alternative opportunities.

BNC continues to provide essential services to the community, including operation of the water treatment plant, a medical facility and supply of teachers and educational scholarships.