Kagara Ltd has begun talks with potential buyers of its nickel assets after its mining partner Western Areas indicated it was not interested in a purchase.

Western Areas last week rejected speculation it would buy Kagara’s Lounge Lizard nickel mine in Western Australia.

Under an agreement reached in May 2009, Western Areas mines and processes about 50,000 tonnes per year of ore from the Lounge Lizard nickel deposit on Kagara’s behalf, selling the product through its own offtake agreements with BHP Billiton and China’s Jinchuan.

Kagara said on Tuesday it was now in talks with other potential buyers of the Lounge Lizard mine.

“Kagara and its adviser Goldman Sachs & Partners Australia have commenced discussions with potential purchasers of Kagara’s nickel assets,” it said in a statement.

“Kagara expects to finalise the sale process during the first quarter of 2012.”