Australian nickel miner Albidon Ltd. (ALB.AU) said Tuesday its future depends on closing a conditional financing proposal from its major shareholder Jinchuan Group Ltd. with a deadline at March 20.

The Perth-based miner also announced it will suspend its 10,000 metric ton Munali nickel mine in Zambia immediately because of low metal prices, laying off 350 workers and contractors.

"Notwithstanding improved operating performance and capital previously raised, depressed nickel prices have made ongoing operations at Munali unsustainable," Albidon said in a statement.

The news marks a stark turnaround for the former takeover target that only in May last year had a market capitalization of around A$700 million. Albidon's current market capitalization is about A$9.9 million. At 0145 GMT, its shares were down 2.2 cents at 5 cents.

China's largest nickel producer Jinchuan holds a 18.4% stake in the miner, and has a life-of-mine offtake agreement for Munali as well as holding US$15 million of subordinated debt.

The proposed financing comes in three tranches. Tranche one is a US$1.8 million payment for January and February nickel concentrate, tranche two is US$7 million in equity at 8 cents a share and tranche three is a convertible note facility at 10 cents with a coupon equivalent to the interest rate on Jinchuan's subordinated debt, Albidon said.

"These funds will be used as working capital and possibly limited mine development," the company said.

The financing deal depends on a number conditions, such as Albidon's secured and unsecured creditors agreeing to the proposal, Jinchuan completing due diligence on Munali and shareholder approval.

All conditions have to be met by March 20.

Albidon commissioned Munali last year, and produced first concentrate in July.

Munali is the latest in a long list of nickel mines that have been put on care and maintenance because of the protracted downturn in commodity prices.

The most prominent mine closure so far has been BHP Billiton Ltd.'s (BHP) decision to suspend its 50,000 ton a year Ravensthorpe mine, which like Munali was still in the ramp-up phase.

 
   -By Elisabeth Behrmann, Dow Jones Newswires;

61-2-8272-4689 elisabeth.behrmann@dowjones.com
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