FNX, Dynatec exercise Inco option (December 22, 2003)

The Sudbury joint venture of FNX Mining (FNX-T) and Dynatec (DY-T) has moved to full ownership of five properties it 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, now owns all of the McCreedy West, Levack, Norman, Kirkwood and Victoria properties. Under an agreement with Inco, the partners could exercise an option to take ownership once they had spent $30 million on exploration. 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 undergoing a feasibility study. The size of the remaining resource at Levack is 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 2.5-5% 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 the right to back-in for a 51% interest by financing the cost of bringing the new deposit into production.