After having a challenging time with ramp development, Liberty Mines (LBE-t) has reached the preproduction stage at its McWatters nickel mine, 29 km south of Timmins, Ont.

McWatters is one of three mines in Liberty's portfolio located on its 100%-owned, 125-sq.-km Shaw Dome nickel belt property.

The property includes the 2,000-tonne-per day Redstone mill, which is currently processing about 200 tonnes per day from the Redstone nickel mine. Redstone is providing the company with earnings of up to $400,000 per month.

A feasibility study for the third mine, Hart, is due out this October and company president and CEO Gary Nash says the startup of McWatters will make the path to production at Hart a bit smoother.

"McWatters gives us the opportunity to make a fair amount of cash," Nash says. "We have some debt of $16 million to pay off next year."

Preproduction at McWatters, located 9.5 km from the mill, has started on the 65-metre level while ramp development continues to the 130-metre level. Liberty expects to operate at a rate of 200- 600 tonnes per day during the fourth quarter.

Getting to this point took a little longer than expected after the brow of the portal required extra repairs to prevent potential injuries from falling rock in the spring.

"We had to go through a fault structure," Nash explains. "Water was percolating through the rock and it took about a month and a half to get through to grout it off, screen it, rock-bolt it and then rescreen it to make it safe."

From this point, Liberty plans to ramp up to 1,400 tonnes in the first quarter of 2009, eventually reaching 1,600-1,700 tonnes per day. The company expects to operate McWatters for 28 months to produce 9.6 million lbs. of nickel. The deposit has a reserve of 597,000 tonnes grading 0.92% nickel.

"It's a fairly short mine life; we may find more ore, but we don't know yet," Nash says. "We'll probably start a drill program in January or February from within the mine."

Meanwhile, at the Redstone mine, the ramp has been completed to at least 488 metres from which point a drill drift is being developed so the company can drill test to the 671-metre level. Liberty is planning to have an updated resource calculation by the first quarter of 2009.

With the Hart mine feasibility study nearing completion, Nash says the company won't do much more development work at Redstone even though there's potential to find more mineralization at depth. The company has a shaft in place to do it but the cost would be too high. Even down the road, Nash says the company's exploration projects, which are shaping up into near-surface deposits, are much more appealing.

"It's much wiser for us to spend our money at the Hart mine because a near-surface deposit can be mined with a ramp," Nash says. "When we started to build the shaft at Redstone, the decision was made before we discovered Hart. At the time, that's all we had, but now there are other options."

Over at Hart, 6 km east of Redstone, Liberty is finishing up metallurgical testing and environmental base line studies for the feasibility study due out in the fourth quarter, which will quantify the economics of the project.

Liberty plans to begin mine construction in the second quarter of 2009.

The Hart mine hosts a resource of 1.39 million tonnes grading 1.5% nickel and 0.1% copper, totalling 45.97 million lbs. of contained nickel, as well as an inferred resource of 286,000 tonnes grading 1.36% nickel and 0.09% copper, or 8.57 million lbs. of nickel.

Nash says the Hart deposit will likely be mined out by 2014 if production begins in fall 2009, though the company plans to do some more drilling next year to get around the dyke, with hopes of extending the orebody.