ENK sells off Caldag project for $40m

15th September 2011 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) - Emerging midtier nickel laterite producer ENK has signed a heads of agreement with a private Turkish company to sell the Caldag nickel project, in Turkey, for $40-million in cash.

ENK’s subsidiaries European Nickel Spain and European Nickel Holdings have signed a binding agreement with a private Turkish company for the sale of its entire issued share capital of Sardes Nickel Madencilik and Turmad Madencilik Ve Ticaret, which includes the Caldag nickel project.

ENK MD Rob Gregory said on Thursday that the transaction brought immediate value to shareholders, and removed the costs associated with keeping the Caldag project on care and maintenance.

The Caldag project, which has a proven Joint Ore Reserves Committee resource of 33.2-million tons at 1.13% nickel, was placed under care and maintenance during December last year, following continual delays surrounding the award of a forestry permit.

While on care and maintenance, ENK decided that the company would consider all options to maximise the value of the project, while refocusing operations on its wholly owned Acoje asset.

“The sale outcome will provide the funds required, without the need to raise additional equity to allow ENK to complete the bankable feasibility study on its Acoje nickel laterite project in the Philippines, which is targeting first production in 2013,” said Gregory.

Under the terms of the agreement, the ASX- and Aim-listed ENK would receive a $6-million deposit by Friday, with the remaining $34-million payable on the closing of the transaction.

Subject to the completion of the transaction, the $40-million to fully fund the bankable feasibility study at Acoje, was on track for completion by mid-2012, without the need to raise capital from shareholders.

A prefeasibility study at Acoje was completed in late 2008, with the results demonstrating that the project was economically viable. Using heap leach technology, the annual production at Acoje was expected to be around 24 500 t/y of contained nickel, and 930 t of contained cobalt, with a life-of-mine of ten years.

Additional resources drilling was currently under way, and was expected to significantly lengthen the life of the mine.