Canadian miner First Quantum Minerals is budgeting a further $US150 million to bring the Ravensthorpe nickel mine into production within 18 months, after it today announced it had bought the operation from BHP Billiton.
Canadian miner First Quantum Minerals is budgeting a further $US150 million to bring the Ravensthorpe nickel mine into production within 18 months, after it today announced it had bought the operation from BHP Billiton.
BHP announced earlier today that it had sold the troubled asset for $US340 million ($A376 million).
Settlement of the deal is expected during the first quarter of next calendar year, with the sale subject to Foreign Investment Review Board and WA government approvals.
First Quantum headed off competition from Minara Resources and China Metallurgical Group to buy the project, which was expected to be sold for between $US300 million and $US500 million.
A spokesperson for First Quantum today said it would take a year for production to be restarted at Ravensthorpe and another six months to ramp up production.
Optimal average production is expected to be 30,000 tonnes of nickel each year for an estimated period of 32 years.
The company said it would cost $US150 million to modify Ravensthorpe to bring it online.
BHP Billiton acting president of stainless steel materials, Gerard Bond, described the result as "outstanding".
"We are delighted that BHP Billiton and First Quantum have reached this agreement," Mr Bond said.
"This reflects the culmination of a thorough and exhaustive study into a range of future options for Ravensthorpe, which has delivered a positive outcome for BHP Billiton, First Quantum and the local communities of Hopetoun and Ravensthorpe."
BHP Billiton closed Ravensthorpe amid troubles in exploiting the nickel laterite deposits and plunging prices of the metal.
The company has been considering its options for Ravensthorpe after the nickel mine, which cost about $US2.1 billion ($A2.32 billion) to build, shut its doors in January.
The move saw 1,800 people lose their jobs and BHP write-down the value of the mine to zero.
Bell Potter Securities client adviser Chris Kimber said while Ravensthorpe may eventually prove to be a productive asset, BHP Billiton wanted to wash its hands of it.
Mr Kimber said the miner got so much bad publicity from its closure that it accepted a sale price at the bottom end of estimates.
"When things are looking better they may say `hold on, I wish we still had that'," he said.
BHP Billiton said it will reverse previously recognised pre-tax impairment charges from June 30 of an estimated $US630 million ($A696.75 million) for the half year ended December 31.
Bruce McNally from the Ravensthorpe Hopetoun Media Liaison Group said it was great news that the mine could be re-opened.
"We are very excited about that, that is absolutely fantastic," Mr McNally said.
"I am even more excited to see the back of BHP," he added, describing the world's biggest miner as a "parasite" on the community.
He said he hoped the decision meant some of the struggling local businesses who had invested in readiness for the mine's operation would get a boost.
Announcements from BHP and First Quantum are below:
BHP Billiton is pleased to announce it has signed an agreement to sell the Ravensthorpe Nickel Operation to First Quantum Minerals Australia Pty Ltd, a wholly owned subsidiary of First Quantum Minerals Ltd ("First Quantum") for US$340 million. It is expected the sale will be finalised during the first quarter of 2010 calendar year.
The sale is subject to relevant approvals from the Australian Foreign Investment Review Board and the West Australian Minister for Mines and Petroleum.
First Quantum is listed on the Toronto Stock Exchange in Canada and the London Stock Exchange in the United Kingdom. The company intends to undertake further review work with a view to recommencing operations at Ravensthorpe. In addition to the purchase price, First Quantum's proposal was compelling having regard to their financial and operational capability, and their offer's minimal conditionality and immediate acceptability.
BHP Billiton's Acting President of Stainless Steel Materials, Gerard Bond, said the result was an outstanding outcome for all parties, including the local communities.
"We are delighted that BHP Billiton and First Quantum have reached this agreement. This reflects the culmination of a thorough and exhaustive study into a range of future options for Ravensthorpe, which has delivered a positive outcome for BHP Billiton, First Quantum and the local communities of Hopetoun and Ravensthorpe.
"We will work with the new owners of Ravensthorpe to ensure an effective handover of the operation in the coming months. We wish First Quantum every success with this new chapter for Ravensthorpe", said Gerard Bond.
BHP Billiton will reverse previously recognised pre-tax impairment charges from 30 June 2009 of an estimated US$630 million (US$441 million post tax) for the half year ended 31 December 2009. This will be reported as an exceptional item.
First Quantum Minerals Ltd. ("First Quantum" or the "Company", TSX Symbol "FM", LSE Symbol "FQM")
today announced that it has entered into a binding agreement with BHP Billiton to acquire the Ravensthorpe Nickel
Operation in Western Australia for US$340 million.
The agreement is subject to relevant approvals from the Australian Foreign Investment Review Board and the West
Australian Minister for Mines and Petroleum. Subject to those approvals, the acquisition is expected to be finalized during
the first quarter of 2010.
"The acquisition of the Ravensthorpe Nickel Operation is a major step towards First Quantum achieving its goal of
becoming a globally diversified mining company," said Philip Pascall, Chairman and CEO of First Quantum.
"This project together with the recently announced commitment to build the Kevitsa project in Finland has the potential to make
the Company one of the world's leading nickel producers. We are committed to re-starting Ravensthorpe which we
believe we can successfully achieve within a realistic timeframe. We are confident that our experience from many years of
successfully developing and operating complex projects will be invaluable in making this a reality. Our exceptional
balance sheet, strong cash flow from the Company's existing operations and the realistic capital cost base for
Ravensthorpe provide us the time and flexibility to address the commissioning and operational issues previously
encountered in order to realize the full potential of this exceptional project."
"As with all of our operations and projects around the world, we fully recognize our responsibility to the Ravensthorpe
community and all other stakeholders in this project and they should be aware that the success we have achieved in the
resources industry to date has been built on having safe, healthy workplaces, sound environmental practices, support of
the communities in which we operate and sustained strong financial performance."
"First Quantum's successful growth to this point has been built on identifying projects with high potential and applying
our comprehensive skills to realize that potential. We embark upon this diversification and expansion of the Company's
asset base with confidence," Mr. Pascall concluded.
