Melbourne, Australia — MININGREVIEW.COM — 10 December 2009 – First Quantum Minerals Limited “’ a Canadian-based mining and metals company engaged in
mineral exploration, development and mining predominantly in Africa “’ .is to buy BHP Billiton’s closed Ravensthorpe nickel mine in Australia for US$340 million R2.5 billion), paving the way to revive production that could add nearly 3% to world supply.
Listed on the Toronto and London Stock Exchanges, First Quantum revealed that it expected the mine would produce an average of 39 000 tpa for the first five years after operations re-started. Overall, production over its expected 32-year life was forecast at 28 000 tpa.
“First Quantum have paid a price where it should be able to make the asset work after additional capital expenditure,” said Pengana Capital portfolio manager Tim Schroeders. “And BHP are able to walk away and pocket a reasonable amount of cash in that transition, rather than have a dormant asset on their balance sheet.”
Engineering work to restart the operation in Queensland could begin as early as mid-2010, according to a First Quantum spokeswoman Sharon Loung. “We expect that by mid-next year we can start construction on site, and take between six months and a year to start commissioning to ramp up,” she told Reuters.
Ravensthorpe was designed to supply around 55 000 tonnes of nickel annually, or close to 5% of world capacity, but never came near that rate before closing.
First Quantum and BHP said they expected to complete the sale by end-March 2010, subject to approvals from Australia’s Foreign Investment Review Board and the West Australian state government, which wanted the mine to reopen.
BHP spent about US$2.2 billion (R16.5 billion) to build the mine, but shut it in January, just eight months into its life, as nickel prices dropped to barely half the current price.
Caption, Pic 1: Ravensthorpe nickel mine in Australia “’ purchased by First Quantum.