Falconbridge (FL-T) has threatened Swedish-Canadian miner Boliden (BOL-T) with legal action for allegedly reneging on a deal to sell to Falconbridge two properties in Chile — the Lomas Bayas copper mine and the adjacent Fortuna de Cobre property.
Cash-strapped Boliden (BOL-T) earlier announced that it would issue shares to finance operations at the two projects. The deal would involve:
- a common share rights offering of US$114 million, at US20 per share, to existing shareholders — the proceeds to be used to finance the company’s operations;
- a common share offering of US$150 million at US20 per share (with US$50 million to certain Swedish financial institutions and US$100 million to certain of the company’s lenders) — the proceeds to be applied to the company’s bank debt; and
- a proposal to the company’s lenders to refinance and reschedule the remaining bank debt under a new credit facility.
A condition of the restructuring is that Boliden retain its interests in the Lomas Bayas solventextraction-electrowinning copper operation and the Fortuna de Cobre deposit.
Boliden insists that it was unable to reach an agreement with Falconbridge “within the framework of a letter of intent signed between the parties on Feb. 28 for the sale of the properties.”
Falconbridge says the intent agreement was legally binding. The company says Boliden refused to execute a definitive agreement before the deadline — last Friday.
“Falconbridge and Noranda regard this refusal as an attempt to repudiate a legally binding agreement to sell the Lomas Bayas project to Falconbridge,” says a prepared statement from Falco.
Both companies say they are examining their legal remedies, including a Falco action for a court order to force Boliden to complete the sale on the agreed terms.
On a happier note, Falco says its four nickel-copper mines have returned to full production at the Sudbury mining complex in Ontario.
Production at the mines had been halted by a seven-month-long strike by 1,260 maintenance and production workers. The strike ended in late February. During it, the smelter at Sudbury operated at about 50-60% of capacity.
A Falconbridge spokeswoman, Caroline Casselman, told Reuters that the Craig, Fraser, Lindsley and Lockerby mines were now churning out a total of 50,000 tonnes of ore per week, but full capacity had not been restored at the complex’s mill and smelter.
The Sudbury operation employs 1,600 people. It consists of four underground mines and a mill-and-smelter complex. It is capable of producing 130,000 tonnes nickel-copper matte annually.
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