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Financing partner secured for Canadian tungsten project

25th October 2013

  

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Tungsten-molybdenum project developer Northcliff Resources reports that it has secured a partial financing partner for its Sisson opencast project, in New Brunswick, Canada.

Located 100 km by road north-west of the provincial capital, Fredericton, the Sisson property hosts a 334-million-ton proven and probable mineral reserve containing 22.2-million tons of tungsten trioxide and 154.8-million pounds of molybdenum at an $8.83/t net smelter return cutoff.

Sisson will be developed as an efficient bulk-tonnage operation and Northcliff said it intended to undertake value-added processing of tungsten concentrates by constructing and operating Canada’s first ammonium paratungstate (APT) plant at the project site, which will add significant economic value to the project.


New Zealand-based Todd Minerals, a subsidiary of family-owned exploration and production company Todd Corporation agreed to invest up to $39-million in funding, in exchange for a direct interest in the project.

Todd Corporation is one of New Zealand’s most successful companies and has a growing portfolio of mineral investments.

Under the terms of the agreement, Todd will complete a private placement through which it will buy 13.88-million Northcliff common shares for $5-million, at $0.36 a share.

Todd will become the largest shareholder of Northcliff, owning about 15% of the company, and will have the right to nominate a board member and maintain its 15% shareholding in Northcliff by participating in any future offerings.

Todd also agreed to hold its newly acquired shares for 24 months after closing the investment.

Todd and Northcliff will enter into a limited partnership agreement, under the name of the Sisson Project Limited Partnership to advance and operate the project, with Northcliff remaining the operator.

Todd will also have the right to acquire an initial 11.5% interest in the limited partnership by investing $14-million on a staged basis, failing which, Todd will divest its entire interest in the partnership.

The initial investment in the partnership will be made in three tranches with the first tranche of $5-million being made on the execu- tion date of the limited partnership agreement. The remaining two tranches of $5-million and $4-million will be made on achieving agreed project milestones.

Further, Todd holds an option to buy another 10% interest in the partnership, for a total poten- tial interest of 21.5%, by investing $20-million when a final investment decision to start construction is made.

The two partners will each be required to fund their portions of the development capital.

Market Fundamentals Good

“Tungsten market fundamentals remain strong, with robust prices and continued supply restric- tions out of China. These factors underpin the investment case for advanced tungsten deposits in low-risk jurisdictions.
Todd is an important strategic investor in the Sisson project as Northcliff sets out to permit, build and operate the Sisson mine,” Northcliff president and CEO Chris Zahovskis says.

Todd Group CEO Jon Young says: “Todd is pleased to be associated with the Sisson project which, once developed, will be a significant new tungsten producer. The investment is consistent with Todd’s strategy of partnering with proven operators to develop long-term projects.”

He adds that the initial funding from Todd, totalling up to $19-million, is earmarked for ongoing environmental work to support the harmonised environmental-impact assessment process currently being undertaken by the federal and provincial governments, and to continue the design and engineering studies. Northcliff will also continue its efforts to source project financing and offtake arrangements.

In January, Northcliff completed a feasibility study for the project, which confirmed the technical and economic robustness of the long-life openpit development and its potential to be a strategic near-term tungsten development in a stable jurisdiction.

The study estimated a yearly average production of 550 000 t tungsten trioxide contained in APT and 4.1-million pounds molybdenum contained in concentrates with over 27 years of production at 30 000 t/d mill throughput.

Further, according to the project’s website, the Sisson project has the potential to contribute to the diversification of the economy of central New Brunswick through stable long-term employment, business opportunities and the payment of taxes and royalties to the province.

During operations, yearly operating expenditures are estimated to be in excess of $100- million a year. This includes a payroll of more than $20-million each year.

Edited by Megan van Wyngaardt
Creamer Media Contributing Editor Online

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