Quadra FNX Mining Ltd. (TSX:QUX) has signed a term sheet with Toronto-based Xstrata Nickel which would give Quadra the right to use Xstrata assets in the Sudbury, Ontario area to further develop Quadra FNX’s Levack mine complex, which produces nickel, copper, platinum, palladium and gold. The total price tag includes US$10 million in the first year of operation.
Quadra FNX Mining Ltd. (TSX:QUX) announced Friday it has signed the first step towards an agreement with Toronto-based Xstrata Nickel. The term sheet gives Quadra FNX the right to use Xstrata assets in the Sudbury, Ontario area to further develop Quadra FNX’s Levack mine complex, which produces nickel, copper, platinum, palladium and gold.
Vancouver-based Quadra FNX says the term sheet, which is subject to the finalization of a definitive agreement within 60 days, will allow it to save money by stopping ongoing rehabilitation work on the existing Levack #2 shaft.
Another benefit will be “accelerated underground access, development of definition drilling platforms and mine development in the lower portion of the Morrison deposit,” Quadra FNX stated in a press release.
The total price tag of the deal was not immediately clear, but Quadra FNX stated it would be required to pay Xstrata Nickel US$10 million during the first year of operation, in addition to a US$2 million annual lease fee. It will also have to make a sliding scale payment, calculated by weight, of ore hoisted via the Craig shaft.
Under the terms of the deal, Quadra FNX gains access to the Craig shaft and mine infrastructure for the life of the Levack mine/Morrison deposit. Quadra FNX will operate the Craig shaft and underground infrastructure but will not undertake mining from Xstrata Nickel's Craig property.
Quadra stated it will gain improved operating flexibility, underground infrastructure, ventilation and power distribution to the lower parts of its Morrison deposit, which produces mainly copper but also platinum, palladium, gold and nickel.
The Craig shaft, which is about 5,000 feet deep, is connected to Quadra FNX's Morrison deposit by an access drift on the 4,000 level that represents a second access point to its operations. The first access point is a ramp from the Levack #2 shaft on 2650 Level.
In addition to its Levack complex, Quadra FNX has mines in Nevada, Arizona and Chile.
In addition to its Sudbury operations, Xstrata Nickel has operations in Quebec, the Dominican Republic, Australia, Norway, Tanzania and Brazil. It is part of the Zug, Switzerland-based Xstrata PLC.
DCN DIGITAL MEDIA
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