Prony Resources plans for restart of nickel production in New Caledonia
The company, which operates the Goro mine and a plant producing battery-grade nickel, returned workers to facilities on Monday.
Canada-based nickel miner Sherritt (TSX:S) has struck a deal with its partners at the Ambatovy nickel operation in Madagascar, allowing the company to eliminate $1.4 billion in debt.
In a news release, the Toronto-based firm said it will reduce its stake in the joint venture from 40% to 12%, and remain the mine operator. The nickel-cobalt mine and processing facilities are expected to run until 2024.
“After months of negotiation, I am pleased to be able to announce a resolution which removes the largest area of uncertainty for both Ambatovy and Sherritt. With this transaction, we eliminate $1.4 billion in debt from Sherritt’s balance sheet, and maintain our exposure to Ambatovy with a clean 12 per cent interest and continuity as the operator,” CEO David Pathe said in a statement.
Sherritt didn’t say what the mine’s new ownership structure would look like, but previously Sumitomo Corp. owned 32.5% and Korea Resources Corp (Kores) had a 27.5% stake.
In February Sherritt revealed it was looking at exiting Ambatovy – a mine it spent 90% of the $5.5 billion it cost to develop, with its Asian partners – in an effort to relieve a crushing debtload that had caused red ink to spill.
To build the mine, Sherritt had to borrow US$650 million from its Korean and Japanese partners, to pay for its 40% share of what is the world’s biggest nickel mine, with the capacity to produce 60,000 tonnes of nickel and 5,600 of cobalt a year.
Sherritt, which also owns oil and gas operations in Cuba and mines cobalt and nickel on the island through its Moa joint venture, reported a net loss of $378.9-million for 2016. 2015 was quite a bit worse, with a net loss of $2.1 billion largely due to a $1.6-billion writedown on Ambatovy.
The company’s stock actually gained 1.11% on the news, to close at 91 cents in Toronto.
