Nord Pacific buys Tritton

Albuquerque, N.M.-based Nord Pacific (NPF-T) has purchased the remaining half of the Tritton copper deposit in Australia it did not already own.

Its partner, Australian-listed Straits Resources, receives US$5.8 million, including US$1.9 million on closing. Nord Pacific will begin making semi-annual payments of US$487,500 six months from now, and will make six annual instalments of US$325,000, beginning a year after the start of copper production.

Situated near the Girilambone copper mine in New South Wales, Tritton is envisaged as an underground operation. Construction is to begin in the fourth quarter, with startup slated for the first quarter of 2002.

The operation is expected to contribute 40 million lbs. copper annually over a 7-year life span. Reserves stand at 4.6 million tonnes grading 3.14% copper within a resource of 9.2 million tonnes grading 2.63%.

Capital costs are pegged at US$27.5 million, and the company has lined up limited recourse debt financing from the Bank of Western Australia for construction. BankWest will provide debt and credit support instruments, including a cash advance of US$20 million. It will also provide credit facilities for hedging against copper prices, currency rates and interest rates. The funding is conditional on a technical review by an external engineer.

“The Tritton mine is key to Nord Pacific’s future and is expected to provide continued cashflow as the Girilambone mine approaches the end of its life,” says Nord President Pierce Carson.

Girilambone is due to close in a few years. Straits and Nord Pacific started the open-pit, solvent extraction-electrowinning operation in 1993. Nord Pacific’s 40% share of production in the recent first quarter was 4.7 million lbs. copper, up from 4 million lbs. a year ago.

As part of the Tritton agreement, Nord Pacific has granted Straits an option to buy its 40% interest in Girilambone, so that it can focus on Tritton.

“The new mine fits well into the company’s strategy of focusing on achievable projects that generate cash flow and earnings,” Carson says.

Nord Pacific also owns a 100% interest in the Simberi gold project in Papua New Guinea, and, through parent company Nord Resources (NRDS-O), has a carried interest in the Johnson Camp copper mine in Arizona.

In the first quarter of 2000, Nord Pacific incurred a loss of US$481,000 (or 4 per share), compared with a loss of US$314,000 (2 per share) in the corresponding period of 1999. Higher copper prices lifted revenues to US$3.9 million, compared with US$2.9 million a year ago.