Brazilian major Vale has agreed to contribute up to $500-million of a $900-million working capital funding package as part of a possible divestment of its 95% interest Vale Nouvelle-Caledonie (VNC), which owns the Goro nickel and cobalt mine, in New Caledonia.
ASX-listed base metals miner New Century Resources in June this year struck an exclusivity agreement with Vale to negotiate the purchase of VNC.
The parties have now inked an indicative term sheet for a conditional funding package of at least $900-million in equity and debt contribution that will be used to fund the ongoing simplification plan and the ongoing working capital requirements of VNC.
In addition to the $500-million likely to be funded from Vale, the French State has agreed to contribute a €200-million facility, while New Century would arrange for %1000-million in long term debt and a $100-million contribution through a combination of third-party VNC level strategic investment and offtake from the Goro project.
The exclusivity agreement in place has also been extended by a further 45 days to allow the parties to conclude definitive documentation.
New Century Resources told shareholders on Tuesday that based on the proposed structure of the transaction, the ASX ahs confirmed that shareholder approval would be required before the transaction could proceed.
Production at Goro started in 2011, with the processing plant designed to produce up to 57 000 t/y of nickel, while the refinery is designed to produce an 80/20 split of nickel oxide and mixed hydroxide product, with cobalt also produced as cobalt carbonate.
Historical operations at Goro have underperformed due to a series of original design flaws and issues regarding operational commissioning, New Century Resources told shareholders, with much of the operational complexity and downtime to date associated with the complex refinery on site.
The operation is currently undergoing a simplification plan to reduce the complexity by shutting down the refinery and increasing capacity of the mixed hydroxide precipitate (MHP) process.
The simplification plan will consist of four key pillars, including limonite-only processing, the exporting of saprolite ore, the decommissioning of the refinery to only produce mixed hydroxide product, and the implementation of dry stack tailings at the mine.
Several achievements to the simplification plan has been achieved to date, including the successful refinery shutdown, the ramp-up of MHP production, improvement in overall plant uptime since the refinery shutdown, trial saprolite sale to an on-island customer and planned limonite only feed trial planned for August.
New Century Resources said on Tuesday that the shutdown of the refinery and the transition to MHP-only production in the June quarter has put the operation on track to deliver its best monthly production in over two years.