PERTH (miningweekly.com) – ASX-listed Pacific Nickel has struck a non-binding indicative term sheet with diversified major Glencore for a three-year, $22-million pre-export finance facility, along with a four-year offtake arrangement for all of the production from the Kolosori nickel project, in the Solomon Islands.

The offtake agreement could be extended by a further two years, by mutual agreement. The offtake pricing will be linked to market prices, and subject to standard commercial adjustments for product quality.

Pacific Nickel told shareholders on Wednesday that the $22-million debt facility will comprise a $17-million construction tranche and a $5-million reserve tranche.

These facilities remain subject to Glencore completing its final due diligence, approval of the Kolosori mining licence, credit approvals and full documentation. As part of this agreement, Glencore has been granted an exclusivity period from the date of the non-binding indicative term sheet until 120 days after the delivery of the Kolosori definitive feasibility study (DFS).

“We have been very pleased with the level of interest shown in the Kolosori project. Finalising debt finance and product offtake facilities represents a significant milestone for the company,” said Pacific Nickel CEO Geoff Hiller.

“Moving forward with Glencore is another important key to the success of this project. This supports the company’s overall strategy of working with the Solomon Islands government to develop the Kolosori nickel project for the benefit of local communities and all stakeholders.

“We look forward to working with Glencore to complete its due diligence and the documentation process over the coming weeks and will continue to provide updates in the near future.”

Early works at Kolosori were completed successfully earlier this year, including the construction of infrastructure, the excavation of a test pit to assess mining and stockpile designs and to calibrate grade control methods, the completion of a geotechnical assessment, and an assessment of the quarry site to provide construction materials for wharf and road construction.

The DFS for the project is due for completion in the second quarter.