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Quadra FNX, Xstrata Nickel pair up on mine access

Quadra FNX and Xstrata Nickel are working on an agreement that would allow Quadra FNX to use Xstrata Nickel infrastructure to further develop and operate the Levack Mine, including the Morrison deposit.
Northern Ontario Business Staff

Quadra FNX and Xstrata Nickel are working on an agreement that would allow Quadra FNX to use Xstrata Nickel infrastructure to further develop and operate the Levack Mine, including the Morrison deposit.

Accessing Xstrata Nickel's infrastructure is anticipated to “significantly improve the operational flexibility of the Morrison deposit and provide additional mining and drill access in the lower portions of this high-grade ore body,” according to a news release.

“The access arrangement with Xstrata Nickel provides mutual benefits to both parties going forward,” said Quadra FNX president and CEO Paul Blythe in the release. “We will be advancing the implementation plan in order to shift operations from the Levack #2 shaft to the Crag shaft immediately. This will be a significant step forward in the optimization of our high-grade Morrison deposit.”

Under terms of the arrangement, Quadra will have access to the Craig Mine and infrastructure for the life of the Levack Mine/Morrison deposit, and will operate the Craig shaft and underground infrastructure but will not undertake mining from Xstrata Nickel's Craig property.

In the event Xstrata Nickel exercises its option to resume operational management of the Craig shaft, it will continue to provide access to Quadra FNX to hoist up to 450,000 tonnes per year of material from the Levack Mine/Morrison deposit.

In addition, Quadra FNX will pay Xstrata Nickel USD$10 million during the first year of operation and a USD$2 million per year lease fee, plus a sliding scale payment per tonne of ore hoisted via the Craig shaft.

This arrangement is subject to the finalization of a definitive agreement that provides for these and other terms within 60 days.
The approximately 5,000 foot Craig shaft is connected to Quadra FNX's Morrison deposit by an access drift on the 4000 level that represents a second access point to its operations, the first being a ramp from the Levack #2 shaft on 2650 Level.
The arrangement also enables Xstrata Nickel to retain the operational integrity and productive capacity of the Craig infrastructure which has been in a "care and maintenance" state since February 2009.