Dynatec takes over interest in Ambatovy

In a shares-for-property deal with Phelps Dodge (PD-N), Dynatec (DY-T) has assumed full ownership of the Ambatovy nickel laterite project.

Phelps Dodge, which had held a 47% interest through subsidiary Phelps Dodge Africa, will receive about 21 million Dynatec shares in the transaction, giving it a 10% interest in the company. The company also receives 100 preference shares in Dynatec (BVI), which is based in the British Virgin Islands and owns the Ambatovy project directly.

The preference shares can be sold back, at Phelps Dodge’s option, one year after the start of nickel production, at a price making up the difference between its Dynatec shareholding and US$70 million. Dynatec can buy back the shares at any time for the same amount and has the option of paying for Phelps Dodge’s put option by issuing up to half the amount in Dynatec shares.

A draft feasibility study on Ambatovy is in the hands of both partners. The study proposes mining 60,000 tonnes nickel and 5,000 tonnes cobalt annually, using a pressure acid leach process. The project has a resource in all categories of 210 million tonnes grading 1.1% nickel and 0.1% cobalt.