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- New Century Resources (NCZ) has signed a term sheet for a US$900 million (roughly A$1.2 billion) funding package with Vale Canada and the French State
- This is part of New Century and Vale’s potential 95 per cent acquisition of Vale New Caledonia and, by extent, its Goro Nickel and Cobalt Mine
- The funding package will be used to fund an ongoing simplification plan for the project and general working capital
- So far, the simplification plan has prepared the project to deliver its best monthly production in over two years
- The project has also shifted to Mixed Hydroxide Precipitate (MHP)-only production on site
- MHP-only products are highly sought after by the electric vehicle and steel alloy industries
- Company shares are up 2.56 per cent and are trading for 20 cents
New Century Resources (NCZ) and Vale Canada (VCL) continue to progress the potential acquisition of the Goro Nickel and Cobalt Mine in New Caledonia.
The Goro Nickel and Cobalt Mine is the largest nickel and cobalt high-pressure acid leach (HPAL) operation in the world. It also strategically lies within a top nickel producing region and contains 11 per cent of global nickel reserves.
Foreign reserves and resources consist of a total 193.5 million tonnes at 1.36 per cent nickel and 0.13 per cent cobalt, with 2634 tonnes of nickel and 249,000 tonnes of cobalt.
In May, New Century and VCL entered an exclusive 60-day agreement to complete due diligence and negotiate a potential acquisition of 95 per cent of the issued shares in Vale Nouvelle-Calédonie S.A.S. (VNC). VNC owns and operated the Goro Mine.
The parties have agreed to extend the exclusivity period for a further 45 days for the potential transaction and New Century expects to make a binding offer for VNC in September.
So far, due diligence has outlined a solution to simplify the Goro operation, allowing for improved production and lower costs.
Term sheet and conditional funding package
Commercial negotiations have led to signing an indicative term sheet for at least a US$900 million (roughly A$1.2 billion) financing package. The funding will facilitate the simplification plan and general working capital for the operation.
The money will be in the form of equity and debt contributions from a combination of Vale, the French State (through a renewal of an existing facility) and New Century-sourced financing partnerships.
Broken down, Vale will make a cash contribution of US$500 million (roughly A$697.4 million) and proactive discussions with the French State will hopefully lead to renewing an existing €200 million (roughly A$327.9 million) facility.
New Century Resources will arrange a US$100 million (roughly A$139.4 million) long-term debt facility through a financial institution and a further US$100 million contribution through a combination of third-party VNC level strategic investment and Goro offtake prepayments.
Simplification plan update
The simplification plan is being undertaken due to a series of original design flaws and issues that led to historical operations underperforming.
The operational complexity and downtime has been associated with the complex refinery on site, which is used to produce nickel oxide and cobalt carbonate. A separate simpler process is used to produce nickel and cobalt-containing Mixed Hydroxide Precipitate (MHP) on site.
In the last two months, the simplification plan has achieved successful refinery shutdown, ramp-up of MHP production and improvement in overall plant uptime.
The refinery shutdown and transition to MHP-only production has put the Goro operation on track to deliver its best monthly production in over two years.
The trial saprolite sale to customers in New Caledonia is currently underway and a planned limonite-only feed trial is expected in August.
MHP offtake discussions
As part of the proposed transaction, New Century will be responsible for the offtake and sale of all MHP production from Goro.
MHP is a key intermediate product used for the expanding electric vehicle (EV) industry. MHP is also used as a nickel source for the conventional steel alloy and plating industries.
Due to its European source and classification as a quality product, the company believes MHP production from Goro is on its way to being seen as a premium product.
The company has already received strong offtake interest and proposals are underway from two prominent mining companies, several multi-national commodity trading houses and a market-leading end user in the automotive industry.
Company shares are up 2.56 per cent and are trading for 20 cents each at 12:21 pm AEST.
