Falconbridge bid values Raglan at about $56 million

Raglan owns the finest undeveloped nickel reserves in Canada. Located in the remote Ungava region of Quebec, the Raglan reserves total 12 million tons, grading a rich 3.11% nickel and 0.79% copper per ton with appreciable platinum group metals.

Despite the richness of the rock, which at current metal prices has a gross value in excess of $525 per ton, the company has been reluctant to develop the property in past years.

Major constraints to development include high capital costs, estimated at $235 million, the three years required to build the mine, and most importantly, uncertainty about future nickel prices. In an interview with The Northern Miner just two weeks before the Falconbridge takeover offer, Tom Pugsley, president of Raglan and a Falconbridge officer, said the Raglan deposit is viable at $4(US) per lb nickel (N.M., Apr 10/89). However, such prices would have to be maintained for six years in order to build the mine and get capital payback. He added that Falconbridge does not believe that prices will stay that high that long.

Despite the negative view, the Falconbridge offer values Raglan’s 10.4 million issued shares at almost $56 million. That’s a figure that might appear on the low side considering that at current prices the gross value of the nickel at Raglan’s Ungava deposit is about $6 billion.

]]>