Spooked by sub-par performances at the much-heralded new nickel laterite mines in Australia,
In return, Nord will receive US$5 million in cash, plus US$250,000 upon the completion of financing and US$250,000 upon commencement of commercial production.
Nord’s chief financial officer, Ray Jenner, cites startup difficulties at the Murrin Murrin, Cawse and Bulong mines as one of the reasons for the sale. Recently, Murrin Murrin operator Anaconda Nickel filed suit against Fluor Daniel, blaming the contractor for many of the problems.
These new Australian mines were to revitalize the international nickel market by employing pressure acid leaching, the same process Nord expected to use at Ramu.
However, Nord realized that while Ramu was a significant resource, it would take years to see any payback from the project. Capital costs at Ramu could reach US$838 million — far too steep for a company the size of Nord or its partner, Australian-listed Highlands Pacific.
Highlands Pacific has approved the transaction, settling certain rights disputes with Nord Pacific.
Orogen, which is 50%-held by the PNG government, can earn as much as 47% of the project through various back-in rights.
Nord expects to take a US$4-million loss on the transaction during the fourth quarter.
Once the sale is completed, the company will redirect resources to projects that have a higher chance of realization in the near term, says Chief Executive Officer Pierce Carson. “While we regret disposing of the interest, we believe our shareholders will be better served by the development of our 50%-owned Tritton copper project and our Simberi gold project,” he adds.
Tritton is a satellite deposit 26 km southwest of Nord’s 40%-held Girilambone open-pit copper mine in New South Wales, Australia. A late-1998 feasibility study gave the underground project the green light, though the company and its partner, Straits Resources, did not have sufficient funds to proceed.
Proven and probable reserves stand at 4.6 million tonnes averaging 3.14% copper.
Nord also produced a positive feasibility for a small oxide open-pit operation at its wholly owned Simberi project. With capital costs projected at US$16 million, the mine is expected to produce 40,000 oz. per year at a cost of US$175 per oz. from saprolitic material. For a small mine, however, the potential at Simberi is considerable: the project sits 60 km west of the Lihir gold mine, which produces more than 600,000 oz. annually.
To date, Nord has spent most of its time exploring the oxide skin of the gold system at Simberi.
Nord Pacific is 28%-owned by
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