ONTARIO - Toronto-based FALCONBRIDGE is planning to sell 100% interest in the closed Lockerby nickel mine near Sudbury to FIRST NICKEL. The companies have signed a non-binding letter of intent, and the proposed transaction is subject to a number of conditions.
The following details of the deal were announced on Nov. 29.
* First Nickel will pay $1.5 million for the mine, equipment and structures at the site.
* First Nickel will issue common shares to Falconbridge boosting its share of First Nickel to 19.9% from 17.2%.
* First Nickel will be responsible for future remediation or environment-related costs at Lockerby.
* Falconbridge may back-in to 51% of the property if reserves are estimated to contain more than 150 million lb of nickel.
* Falconbridge will be given the first opportunity to purchase and treat Lockerby ore.
* First Nickel may return the property and environmental responsibility to Falconbridge within 18 months after the deal closes by paying $5 million to the larger company.
Falconbridge opened the Lockerby mine in 1976 and operated it until September 2004 when it closed. Through 2003, over 8 million tonnes averaging 1.79% Ni and 1.07% Cu were mined.
First Nickel plans an extensive campaign of diamond drilling to evaluate the economic potential of the Depth and East zones and it will also conduct a major drilling program to investigate the footwall area. See also www.FirstNickel.com.
This situation has parallels to the McCreedy West mine sold by Inco in 2001; the Sudbury Joint Venture of FNX MINING and DYNATEC was able to reopen it and mine it profitably by concentrating on platinum group metals as well as nickel.