LionOre Nickel (Australia) has negotiated a long-term off-take agreement with
A nickel-sulphide deposit, Emily Ann contains reserves of 1.2 million tonnes grading 3.4% nickel and a resource of 2.1 million tonnes grading 3.98% nickel.
LionOre plans to mine the deposit via a decline at an average total cash operating cost of US$1.55 per lb. of payable nickel, including smelting, refining and byproduct credits.
Under this preliminary arrangement, LionOre will provide Inco with all of its Emily Ann nickel concentrate production, estimated at 6,000 tonnes annually or more. The material will be shipped to the major’s Canadian smelters.
Production could begin as early as the first quarter of 2002, depending on the securing of project financing, consent from third parties and the obtaining of licences.
Furthermore, Inco will provide a 10-year, US$16-million loan to LionOre Nickel to help it build a 250,000-tonne-per-year concentrator and related facilities at Emily Ann.
The agreement also allows LionOre Nickel to include its share of any nickel concentrate that may be produced from the neighbouring Maggie Hays deposit, where resources are pegged at 14.8 million tonnes of 1.45% nickel, including a 2.9-million-tonne portion grading 2.4% nickel. LionOre Nickel owns a 31% stake in Maggie Hays, with the remainder held by Australian-based QNI Limited, a subsidiary of
“We are looking forward to an excellent, long-term relationship with LionOre in this important nickel region of the world,” says Inco Chairman Michael Sopko.
LionOre Mining has hired Haywood Securities to help it raise C$16 million by privately placing unsecured debentures that will have a term of five years and a 10% coupon rate. The debentures will be convertible into shares at a price of C$2.40 per share. At the end of the 5-year period, LionOre can repay the debentures in cash or shares, at its discretion.
Haywood says it has already received expressions of interest for the whole amount of the proposed issue and that the financing may close by the end of April.
The funds raised could be used to develop Emily Ann or to expand nickel production by Tati Nickel Mining of Botswana. Tati is owned 41.65% by LionOre, 43.45% by
The Inco deal is that company’s second long-term, nickel-concentrate supply agreement with an Australian nickel producer in recent months.
Inco’s Manitoba Division in Thompson expects to receive its first nickel concentrate in mid-2000 from the Cosmos nickel project, also in Western Australia. The mine, owned by Australian-listed Jubilee Mines, is expected to provide Thompson with 31,780 tonnes of nickel-in-concentrate over the next three years.
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