Tritton takes another blow (September 17, 2001)

Teck Cominco (TEK-T) has decided not to continue work at Nord Pacific‘s (NPF-T) Tritton copper project in New South Wales, Australia.

Nord Pacific has been working with Cominco to investigate the feasibility of constructing and operating a hydrometallurgical treatment plant based on Cominco’s proprietary metal production technology.

Samples from the Tritton deposit are amenable to Cominco’s technology. However, due mainly to current economic conditions, the major has decided not to proceed with the project. Teck Cominco says the project could still be attractive if economic conditions improve in the future.

Earlier this summer, Nord Pacific, which is New Mexico, failed to make a required payment for the Tritton copper project, prompting its partner, Australian-listed Straits Resources, to seek redress.

A year ago, Nord Pac sought to buy the half it did not own of the Tritton project. The agreement called for the junior to pay A$9 million (US$4.7 million) to Straits, the vendor.

Nord Pac paid A$3 million upon signing and agreed to make four semi-annual payments of A$750,000, followed by six payments of A$500,000 when production began.

However, Nord Pac recently underwent a change in management and is strapped for cash. The company decided not to make the US$750,000 payment that was due June 1.

Straits filed a default notice and requested remedies available under the contract.

Nord Pac also announced that it would be unable to pay a bill to KPMG to complete its year-end financial statements. KPMG is an independent consulting and accounting firm based in Amsterdam.

Nord Pac has already missed the first deadline for filing financial statements. On July 26, the company was suspended from trade on the Toronto Stock Exchange because of its failure to meet listing requirements.

Nord Pac says it had negotiated a tentative agreement to acquire Straits’ interests in the Girilambone mine and facilities and to pay the remaining amounts due on the Tritton property purchase, but that the deal was tied to Teck Cominco’s participation.

Nord Pacific is now looking to renegotiate the draft agreement with Straits.

The Tritton deposit is a lens of copper mineralization. It is located 12 miles south of the Girilambone copper mine.

Straits operates Girilambone, which is nearing the end of its life, through a 60-40 joint venture with Nord Pacific. Straits retains the right to acquire Nord Pac’s 40% stake through the Tritton transaction.

Nord Pac had hoped to develop Tritton as an underground operation, with copper production pegged at 40 million lbs. per year for seven years. A year ago, reserves stood at 5.1 million tons grading 3.14% copper within a resource of 10.2 million tons of 2.6% copper.

In addition, the company has a 100% interest in the Tabar Islands gold project in Papua New Guinea.

Nord Pac is 28.5%-owned by Nord Resources (NRDS-O), which is under bankruptcy protection.

As part of a cost-cutting plan, Nord Pac’s CEO Leland Erdahl has agreed to step down from his duties as officer and director and to continue unpaid with the company. John Roberts, a director, will assume the position of chairman. Mark Welch, the company’s vice president of development, will assume the positions of president and CEO.

Nord Pac says it hopes to produce copper from Girilambone until it can develop Tritton.

If gold prices improve sufficiently, the company hopes to develop its fully permitted Simberi gold project in Papua New Guinea.