European Nickel secures finance for Turkish mining operation.admin
AIM listed, London based, junior mining company, European Nickel, which recently signed an agreement with Greece’s Larco to deliver 200,000 tonnes of ore from its Caldag mine in Turkey to the latter’s ferro-nickel smelter at Larymna in Greece, is now reported to have secured a US$175 million bank loan arranged by Standard Bank, Standard Chartered Bank and Societe Generale. The loan now makes a total of $300 million raised to bring the mining operation to production.
Caldag has previously supplied some 33,000 tonnes of ore to Larco in 2003 during an earlier period of trial mining which generated information used in the bankable feasibility Study which the Company completed in December 2005 for the development of this laterite heap leach project. Mining is being resumed as part of the build-up to the commencement of full-scale construction. It is intended that there will be continuous mining at Caldag from now until the conclusion of the project life in 2020.
Shipments to Larco will take place over a period of 12 months. After some six months and subject to the debt financing, mining for the Larco shipments will be concomitant to the mining of ore for development of the full-scale project. Pricing is based on a fixed percentage of the London Metal Exchange 3 month seller’s price for the contained nickel in each shipment.
Simon Purkiss, Managing Director of European Nickel, commented at the time of the Larco announcement earlier this month ”This is the start of mining operations at Caldag. By starting now we will be able to iron out any problems in grade control and other operational issues in advance of building the leach heaps next year. This forms part of our programme to ensure we can meet the timetable that we have set ourselves on the development of the heap leach project. It will also be a source of revenue and will be profitable.”
The Caldag project is located near Izmir in western Turkey. It is designed to produce 20,400 tonnes of nickel and 1,200 tonnes of cobalt per year in a mixed hydroxide product that will be sold to refineries for processing into nickel and cobalt metal. The capital cost of the project is estimated to be US$254 million and the full project development cost, which includes operating and other costs during the ramp”“up period, originally estimated at US$310 million has now been estimated at the $300 million which has been raised by the company.
European Nickel expects to start construction of the full scale plant this year with the first output of the mixed hydroxide product towards the end of 2007, following an estimated 12-month construction period for the precipitation plant.