"Recent geotechnical modelling of the new drilling data associated with the revised life of mine plan has identified an increased potential for unstable pit walls to develop along known fault lines if existing mine plans were implemented," Zinifex said.

The company said until the revised LOM plan was available at the end of next month it was difficult to quantify the financial impact with certainty, but estimated the economic impact to be $280 million over 3 years.

Of the $280 cost blowout, expenditure during 2007 has been pegged at $120 million to include the $90 million cost of acquiring additional mine fleet to move 36 million bank cubic metres over the next three years.

"The level of cost increases we are seeing is unfortunate but is more than compensated by very significant commodity price increases we have seen over the same period," Zinifex said.

Shares in Zinifex hit a 52-week low of $2.46 around this time last year before gaining ground to hit a 52-week high of $8.25 yesterday. The stock shed 81c (9.9%) during midday trade to $7.41.