DEAL!!!
Weda Bay Minerals Inc -
Weda signs agreement to develop deposits in Indonesia
Weda Bay Minerals Inc
WDA
Shares issued 20,373,384
2000-02-24 close $1.3
Friday Feb 25 2000
Mr. Louis Clinton reports
Weda Bay Minerals has signed agreements for a strategic partnership with
companies in the OM Inc. (OMG) for developing WDA's extensive high-grade
nickel and cobalt laterite deposits in Halmahera, Indonesia. Pursuant to a letter of
agreement signed by WDA and OMG, OMG is obligated to sign agreed
documentation on closing of its recently announced purchase of the nickel and
cobalt refinery in Harjavalta, Finland, subject to OMG's satisfactory completion of
due diligence of WDA and obtaining regulatory and other approvals. Closing is
scheduled for early April.
WDA and OMG have agreed to work together to complete a bankable feasibility
study of the Halmahera deposits estimated to cost $18-million (U.S.) with
completion scheduled for early 2002. The study will consider production of a
high-grade product containing approximately 30,000 tonnes per year of nickel and
3,000 tonnes per year of cobalt. OMG will, under a long-term product supply
agreement with PT Weda Bay Nickel, purchase all product from this first
development phase on competitive terms for treatment at the nickel and cobalt
refinery in Harjavalta, Finland. The product supply agreement is subject to
approval by the shareholders of PT Weda Bay Nickel (owned 90 per cent by
Strand Minerals (Indonesia) Pte. Ltd., a wholly owned subsidiary of WDA, and
10 per cent by PT Aneka Tambang, a publicly listed Indonesian company).
A total of $18-million (U.S.) financing will be provided to WDA through:
A subscription by OMG for WDA shares, by way of private placement for
5,061,552 treasury shares of WDA at a price of $1.35, at a total price of
$6,833,095, giving OMG a shareholding of 19.9 per cent in WDA.
A loan from OMG of the balance of funds for the feasibility study, estimated to be
approximately $19,626,900, convertible at the lender's option at a price of $1.55
per share into common shares of WDA following completion of a positive
feasibility study. In consideration of the loan, WDA will also issue 2,530,776
common share purchase warrants to OMG, exercisable prior to May, 2002, at a
strike price of $2.25.
The loan will be drawn down in two equal tranches: the first, immediately following
approval of the loan by WDA's shareholders, and the second, following a
successful prefeasibility study that WDA estimates will be completed in August,
2001.
WDA will seek shareholder approval of the loan transaction and warrant issuance
at an extraordinary meeting of shareholders to be held in May, 2000. The notice
of the meeting and management proxy circular will be sent to WDA shareholders
promptly after closing. The convertible loan and warrants, if exercised, could
result in OMG holding approximately 40 per cent of the outstanding shares of
WDA.
WDA also announced today that its board of directors has adopted a shareholder
rights plan to ensure that all shareholders are treated fairly in any transaction
involving a change of control of WDA. The plan is similar to rights plans adopted
by other Canadian companies and would provide a greater time frame (60 days)
for shareholder consideration of a takeover bid than is currently provided by
Canadian legislation (21 days). It is subject to shareholder approval.
Louis Clinton, chairman and chief executive officer of WDA, believes that the
arrangement with OMG will ensure the first stage of development of the
Halmahera high-grade nickel laterite deposits. He anticipates that the deposits will
support further expansions, including future production of nickel metal on site.
Mr. Clinton noted that output from the initial stage of production will be purchased
by OMG whose support and technical assistance will be of great help in achieving
a timely startup.
OMG is an international company with operations in the United States, Canada,
Finland, France, Germany, Malaysia, Congo and Taiwan. Its main business
activities include nickel and cobalt refining and production of metal-based
value-added specialty products with a wide range of industrial applications.
OMG's shares are listed on the New York Stock Exchange.
Preparatory work on the feasibility study has already started, Mr. Clinton noted.
As the leader in the next wave of pressure acid leach projects, WDA will have the
benefit of experience from projects currently under commissioning in Western
Australia. This experience should provide WDA with greater technical certainty,
rapid commissioning and lower costs.
Mr. Clinton believes the benefits of producing an intermediate product in the first
stage of development, rather than early production of metal, will result in
minimizing the potential problems encountered in commissioning and rampup as
well as reducing initial capital costs significantly and leading to a shorter
construction period.
Mr. Clinton is also positive about the timing of the project, which parallels the
beginning of Indonesia's economic recovery and transition to democratic
government. The project, located in an underdeveloped region of Indonesia, will
generate foreign currency earnings, employment opportunities for 4,000
Indonesians as well as transfers of new technologies and skills.
The current indicated resource at Weda Bay, at a 1 per cent nickel cutoff grade, is
59.9 million dry tonnes of 1.51 per cent Ni and 0.09 per cent Co within an overall
inferred and indicated resource of 117 million dry tonnes at 1.36 per cent nickel
and 0.12 per cent cobalt. Potential exists to significantly increase the resource,
including the large, low magnesia nickel/cobalt laterite deposits currently under
evaluation by WDA at Santa Monica and Pinto, commencing approximately eight
kilometres from the coast and the proposed refinery site.
Exclusive rights to explore and exploit the Halmahera nickel/cobalt deposits are
held under a contract of work by PT Weda Bay Nickel. The contract of work
expires 30 years after commencement of mining operations. Its term may be
extended with the approval of the government of Indonesia.
(c) Copyright 2000 Canjex Publishing Ltd. canada-stockwatch.com
Hope this works out for you dood!
etc. |
