Maybe not to be: NAP exits stage left at Shakespeare

North American Palladium (PDL-T), through its subsidiary, Lac des Iles Mines, has walked away from option agreements on Ursa Major Minerals‘ (UMJ-V) Shakespeare and Porter Baldwin nickel-copper properties, situated west of Sudbury, Ont.

North American Palladium did not provide a reason for its decision and did not return phonecalls made to the Toronto office.

The moves come as a surprise, at least in relation to the Shakespeare nickel-copper project where a recent feasibility study gave a thumbs-up to a 4,500-tonne-per-day open-pit mine and mill operation.

North American Palladium was earning a 60% interest in Ursa’s share of the project, and had decided to take the project to the permitting stage.

The feasibility study triggered North American Palladium’s obligation to begin funding 60% of the project; had it optioned the property, NAP would have vested its 60% interest by securing project financing.

The other partner, Falconbridge (FAL.LV-T, FAL-N), currently holds 20%.

The feasibility study said the mine would have a life of just under seven years and would take out a probable reserve of 11.3 million tonnes at average grades of 0.33% nickel, 0.35% copper, 0.02% cobalt, 0.33 gram platinum, 0.37 gram palladium and 0.19 gram gold per tonne.

The study, by Micon International, put a 14.5% internal rate of return and a $16.2-million net present value (NPV) on the Shakespeare project, the NPV based on a discount rate of 10%.

Perhaps nost importantly, It estimated the capital cost of bringing Shakespeare into production at $118.5 million, with $48.6 million of that on the mill alone.

Micon’s price estimates put the net smelter return on 1 tonne of ore at $44.10. The figure was based on nickel at US$12,080 per tonne (US$5.48 per lb.), copper at US$2,950 per tonne (US$1.34 per lb.), cobalt at US$20.05 per lb., platinum at US$805.30 per oz., palladium at US$225.20 per oz., and gold at US$438.30 per oz. All those prices were averages over a 5-year decay to long-term historical median prices.

At Shakespeare, Ursa Major continues to permit an open-pit mine and 4,500-tonne-per-day concentrator, and says it is advancing the property toward a “production decision.”

Ursa Major says it is “encouraged” by recent strong base metal prices, which continue to improve the project’s economics.

The Porter Baldwin nickel-copper property is now 100% owned by Ursa Major.