European Nickel PLC (AIM: ENK) said it signed an agreement with BHP Billiton PLC (ASX: BHP; LSE: BLT) under which BHP will release the company from its obligations under the off-take agreement announced in June 2006 in relation to the Caldag project in Turkey.
As previously announced and in accordance with the heads of agreement signed with Jiangxi Rare Earth and Rare Metals Tungsten Group Co Ltd (JXTC) in December 2008, European Nickel intends to enter into a new off-take agreement with JXTC.
The company has also signed a US$4 million deal with Endeavour Financial Corp to provide bridge loan finance pending completion of the proposed US$20 million equity investment by JXTC in Caldag.
Originally, only 50 percent of Caldag's off-take was going to be sold to JXTC but this has been increased to 100 percent by mutual agreement to facilitate the 100 percent debt financing of the project from a Chinese bank.
European Nickel will pay BHP Billiton US$10 million on first drawdown of the project finance facility and a further 24 monthly payments of US$1 million, starting once nickel output has reached 50 percent of the Caldag plant's design specification of 20,400 tonnes per annum of contained nickel.
The maximum funding cost of the Caldag project has not increased as a result of these payments.
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