JOHANNESBURG (miningweekly.com) – ASX-listed Western Areas has executed a formal takeoff agreement with diversified giant BHP Billiton for the sale of up to 10 000 t/y of nickel in concentrate, for a total of 75 000 t from the Forrestania nickel project, in Western Australia.

The company has now started transporting nickel concentrate 340 km from the Cosmic Boy concentrator at Forrestania to BHP Billiton’s Kambalda operation. About 11 000 t of nickel concentrate, with an average grade of 14,2% nickel containing 1 540 t nickel metal, was currently stockpiled at the Cosmic Boy nickel concentrator.

Additionally, there are over 30 000 t of stockpiled ore, at an average grade of 4,0% nickel containing 1 200 t nickel, awaiting treatment at Cosmic Boy.

Western Areas stated on Thursday that it had also consented to the assignment of the residual 60% interest in the existing takeoff agreement with nickel producer Norilsk Nickel Australia, to BHP Billiton.

The assignment would streamline the smelter treatment and the sale process for concentrate from Forrestania. Western Areas retained the right to terminate the Norilsk Nickel Australia takeoff agreement at any time from January 1, 2010.

“We think Western Areas represents a reliable supplier of high-quality nickel concentrate, and we look forward to building a long-term relationship with BHP Billiton. The new offtake agreement provides significant benefits to Western Areas, including the ability to sell nickel concentrate within Australia,” said Western Areas MD Julian Hanna.

Hanna added that the agreement with BHP Billiton was consistent with the board’s decision to split the Forrestania nickel sales into at least two contracts. The BHP Billiton contract is intended to lock in a long-term revenue base for Western Areas, and the future takeoff agreements were intended to be shorter-term contracts, selling nickel concentrate to third parties.

The company was now seeking new takeoff contracts in China and elsewhere for the balance of the concentrate above the 10 000 t/y of nickel to be sold to BHP Billiton.

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