Xstrata sells exploration portfolio to Pure Nickel

Pure Nickel (NIC-V) has closed its deal to buy Falconbridge’s portfolio of Canadian nickel exploration properties from Xstrata (XTA-L) for $15.25 million and 4 million warrants.

Xstrata has kept only the properties around its existing Sudbury and Raglan nickel mines. Pure Nickel gets one former producing mine, the Manibridge mine in the Thompson nickel belt of Manitoba and the William Lake property south of Manibridge, with 11 identified mafic or ultramafic bodies. In northern Quebec, the deal includes a 642-sq.-km land package in the South Trend of the Raglan belt, plus the East Hudson joint venture with Soquem.

There are two properties in central Labrador, Florence Lake and Harp Lake, and one in the southern Keewatin district of Nunavut, the Rainbow property.

Xstrata retains a single back-in right that can be exercised on any one of the properties if a 15-million-tonne resource is outlined on the project. It keeps a 2% net smelter return, half of which Pure Nickel can buy back for $1 million, and has an off-take agreement for any concentrate or ore Pure Nickel produces from the properties.

Pure Nickel financed the acquisition out of an equity offering of 22 million units at $1.25, with each unit consisting of a share plus half a warrant. A single warrant is exercisable at $1.75 for 18 months. The share issue gave Pure Nickel gross proceeds of $27.5 million, with $15.25 million going directly into the Xstrata deal.

Xstrata’s warrants are exercisable for three years, at $2.

Pure Nickel has also started drilling on its MAN project, which straddles the Richardson Highway in eastern Alaska. The drill holes will be testing electromagnetic conductors detected in an airborne geophysical survey earlier in the field season.