Mincor Resources has entered an agreement to acquire Independence Group’s Long Nickel operation as it continues its nickel restart strategy.
As it continues to build its nickel restart strategy in Western Australia’s Kambalda district, Mincor Resources (ASX:MCR,OTC Pink:MCRZF) has entered a binding agreement to acquire Independence Group’s (ASX:IGO) Long Nickel operation.
According to Mincor, the mine has been well maintained since being placed on care and maintenance by Independence in June 2018, keeping the asset in a “mining-ready” state.
With a production history dating back to 1979, Long Nickel hosts a mineral resource of 0.75 million tonnes (Mt) at 4.2 percent nickel, with 32,000 of contained metal.
The newest addition to Mincor’s nickel assets boosts the company’s total Kambalda mineral resources to 4.3 Mt at 3.7 percent nickel, totalling 161,000 of contained metal.
The deal between Mincor and Independence will entail an upfront consideration of AU$3.5 million through 7.77 million fully paid Mincor shares being issued.
Mincor will pay an additional AU$6 million after reaching two milestones, with one being an AU$2 million payment upon producing 2,500 tonnes of contained nickel in ore from the operation. The second milestone is the production of 7,500 tonnes of contained nickel, and would feature an additional AU$4 million payment.
Mincor has the option to pay its expected fees in either cash or company shares. It is anticipated that the acquisition will be completed near the end of this month.
“As well as expanding our strategic footprint in the North Kambalda Dome, the acquisition of the fully maintained mine infrastructure at Long opens up opportunities to exploit the existing high-grade mineral resource (which) contains 32,000 tonnes of nickel and provides potential to enhance capital and operational efficiency by accessing our nearby Durkin North Ore Reserve from the Long decline,” Mincor Managing Director David Southam said in a statement.
After the nickel price took its second major dive in a decade between 2014 and 2016, many producers of the base metal put their operations on care and maintenance. Mincor was one of them, but has since begun what it calls its nickel restart strategy.
Focused on four deposits in Kambalda, the company has been making various moves to get the revamp plan into action, including signing an offtake term sheet with BHP’s (ASX:BHP,NYSE:BHP,LSE:BHP) Nickel West for nickel sulfide ore processing, which happened in March. Mincor also recently managed to boost the resource at its Cassini deposit by 52 percent.
The company is currently working to release a definitive feasibility study for an integrated mine plan related to its restart strategy during this year’s December quarter.
As of Wednesday (May 22), nickel was trading at US$11,960 per tonne on the London Metal Exchange.
Mincor’s share price remained unchanged at AU$0.45 by the end of trading on Thursday (May 23). Meanwhile, Independence Group shares were down 2.48 percent by the ASX’s closing bell on Thursday, ending the day at AU$4.72.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.