Cominco Int’l seeks funds for refinery, Turkish project

In order to fund expansion plans at the Glenbrook nickel refinery and development work at a copper project in Turkey, Cominco Resources International (TSE) recently announced plans to raise $20 million through a share/half-warrant issue.

Cominco International has a 50% interest in the Glenbrook nickel refinery in Oregon which produced about 15.6 million lb. nickel in 1991. Feed for the operation totaled 740,000 tons of laterite ore grading 1.13% nickel, either mined from an adjacent deposit or reclaimed from existing stockpiles. The joint venture estimates sufficient reserves grading 1.25% nickel are available to feed the refinery until ore shipments from New Caledonia commence in the fourth quarter.

Cominco International and its partner (and major shareholder) Cominco (TSE) signed a 10-year ore purchase agreement last year with a mining company in New Caledonia for up to 1.1 million wet tons of ore per year at a grade of about 2.4% nickel on a dry weight basis.

Michael Carr, a spokesman for Cominco International, said the imported ore will have a moisture content of up to 25% and will therefore require drying facilities at the port location.

The joint venture estimates the cost of constructing facilities to handle the imported ore will total about US$33 million. The project includes the construction of facilities for ore storage, crushing, screening, drying and truck loading in Coos Bay, Oreg.

Facilities at the smelter will be upgraded with the construction of added dry ore storage capacity as well as the installation of a circuit to produce granulated ferronickel.

The company anticipates construction will be completed in the fourth quarter of 1992, boosting annual nickel production capacity to 36 million lb. from the current annual rate of about 18 million lb.

Cominco has been funding its subsidiary’s share of capital expenditures to date, and Carr said Cominco International will require about $12 million out of the $20-million issue to complete the work. He added that the company expects to pay Cominco back the advance funds from its share of smelter cash flow.

The joint venture estimates cash production costs for the imported ore at about US$3.10 per lb. based on a nickel price of US$4 per lb. At Cominco International’s 100% owned Cerattepe property in northeastern Turkey, drilling in 1991 outlined an estimated preliminary reserve of about six million tons grading 3% copper. Included in the figure is an estimated one million ton high-grade body grading 9% copper.

The deposit is described as a fault-bounded pyritic breccia body up to 230 ft. thick with a strike length of about 1,100 ft. The deposit lies about 300 ft. below surface and has a dip extent of about 650 ft.

Cominco International plans to conduct close-spaced drilling this year to further define the deposit which is cut off by a downdip fault. Surface work and exploration drilling is also planned to investigate the potential for any fault-displaced extensions of the mineralization.

Additional work includes studies to compare the relative benefits of proceeding with either an underground exploration and development program, or an expanding program of detailed drilling from surface to take the project through feasibility.

Carr said the company will spend about $2 million on the property this year and about $3 million next year for a production target of the end of 1993. Carr said Cominco does not plan to purchase any of the new issue, and estimated its interest will be diluted down to about 55% prior to the exercise of any warrants.

As of Dec. 31, 1991, Cominco International had working capital of about $9.8 million.

The company has sufficient funds to pay its remaining 10% share of development costs for the Quebrada Blanca copper project in Chile; it arranged the sale of a 32.5% interest in the project late last year to Teck (TSE) for $10 million plus future cash payments totalling US$6.47 million.