FNX, Dynatec exercise Inco option (December 10, 2003)

The Sudbury joint venture of FNX Mining (FNX-T) and Dynatec (DY-T) have moved to full ownership of five properties they previously held under an option agreement with Inco (N-T).

FNX, with a three-quarters interest in the joint venture, and Dynatec, with the remaining quarter, took over full ownership of the McCreedy West, Levack, Norman, Kirkwood and Victoria properties with effect from the beginning of December. Under their agreement with Inco, the partners could exercise an option to take ownership once they had spent $30 million on exploration work. By the end of December they will have spent $39.7 million, allowing them to exercise the option two-and-a-half years ahead of its expiry.

McCreedy West is already in production and the nearby Levack mine, about 35 km northwest of Sudbury, is now under a feasibility study. An estimate at Levack released in September put the size of the remaining resource there at 5.5 million tonnes grading 1.9% nickel and 0.9% copper, mainly in the indicated category.

Inco retains an off-take right on any ore produced from the properties; if it does not buy the ore, it has a net smelter return royalty of 2% for base metals and 2.5% to 5% for platinum-group metals and gold. If the joint venture finds a new ore deposit with a minimum resource equivalent to 300,000 tons (272,000 tonnes) of contained nickel, Inco also has a right to back in for a 51% interest by financing the cost of bringing the new deposit into production.