Jordex sells Latin nickel deposit

Although investors are looking to Venezuela for its undeveloped gold potential, a junior company is poised for a significant return on an investment in a laterite nickel deposit, 65 miles southwest of Caracas.

Jordex Resources (TSE) has signed an agreement allowing Anglo American Corp. of South America (AMSA) to acquire 70% of a Venezuelan company, Cofeminas, which owns the Loma de Hierro deposit. Jordex manages and has a 50% interest in Cofeminas, a private company formed in early 1991. The purchase price is based on a US$43.5-million valuation of the nickel deposit. An initial payment of US$2.4-million was paid upon signing, giving AMSA a 5% interest in Cofeminas. A further 5% is to be earned following expenditures of US$2 million for a feasibility study. The remaining 60% can be acquired after the study is completed.

“This is an excellent deal for the company,” Jordex President Brian Hinchcliffe told The Northern Miner. “It is one of the most advanced projects in Venezuela and could be an important part of the country’s emerging mining industry.”

Hinchcliffe also said Cofeminas is the “ideal senior partner” because of its interests in nickel production and its long-term background in South America. “We have full confidence in the outcome of the feasibility study now beginning,” he added.

Loma de Hierro was discovered in the 1940s and fully drilled in the 1960s. During 1992, Cofeminas carried out extensive additional drilling and sampling. A recent review by Terrence Podolsky & Associates led to a reserve estimate of 25 million tons grading 1.8% nickel at a 1.5% cutoff, with a strip ratio of 0.6-to-one. The deposit has a higher-grade (2% nickel) starter zone at surface. The underlying title is secure in that it was directly granted by the country’s mines ministry.

Preliminary capital cost estimates are in the range of US$300-US$350 million for an operation capable of producing 35-45 million lb. of ferronickel per year over an approximate 20-year mine life.

The project is expected to be a low-cost producer because of good road access and the availability of cheap power.