Mincor Resources has sealed the deal with BHP’s Nickel West division on an ore tolling and concentrate purchase agreement.

Mincor Resources (ASX:MCR,OTC Pink:MCRZF) has agreed on an ore tolling and concentrate purchase agreement with BHP’s (ASX:BHP,NYSE:BHP,LSE:BLT) Nickel West division.

While a term sheet was originally announced in March, the two companies finalized and signed a binding agreement this week. Mincor originally held a 20 year agreement with BHP Nickel West to process nickel sulfide ore at the Kambalda nickel concentrator, which expired in February.

With the new agreement in place, the company now has the right to process up to 600,000 tonnes of nickel sulfide ore per year at Kambalda. The nickel concentrate produced will then be sold to BHP Nickel West to be downstream processed at the Kalgoorlie nickel smelter and Kwinana nickel refinery.

Both assets are part of BHP’s massive Nickel West operations in Western Australia (WA).

“We are delighted to have established a long-term partnership with a Tier-1 counter-party who shares our view of the battery market,” Mincor Managing Director David Southam said in a statement.

“Both our teams have taken the necessary time to complete what will be a long-term agreement that we believe will stand the test of time and underpin the future of the Kambalda nickel sulphide region.”

Mincor has been working to restart its nickel operations in WA’s Kambalda district for some time now after having put the assets on care and maintenance in 2016. The move came as pricing for the commodity crashed between 2014 and 2016, which forced several mines to close up shop.

The company noted that the freshly signed partnership will serve as a “significant foundation agreement” to completing a definitive feasibility study (DFS) on Mincor’s official integrated restart plan. According to Mincor, the DFS is docketed to be released in December.

Along with fitting into Mincor’s grand scheme, the agreement also bodes well for BHP’s game plan. In a presentation at Diggers and Dealers in Kalgoorlie, Nickel West President Eddy Haegel laid out the company’s planned development pathway to grow the major asset.

Starting with new greenfield exploration programs, the company plans to subsequently debottleneck several of its Nickel West assets. These include the Mount Keith concentrator, then the Kalgoorlie nickel smelter, followed by the Kwinana nickel refinery.

The company also noted the growth of nickel demand as the electric vehicle market expands, with market impact docketed to take place in the mid- to late 2020s.

“In the meantime we are making investments to position Nickel West for this future opportunity,” Haegel’s presentation states.

BHP also highlighted the growth that it’s experienced in its reserves as these plans are set into motion. According to the company, ore reserves have increased by 654,000 tonnes to hit over 1.5 million tonnes of contained nickel.

As of Monday (August 5), nickel prices were at US$14,855 per tonne on the London Metal Exchange.

Mincor shares were down 1.08 percent on the ASX, closing Tuesday (August 6) at AU$0.46. BHP shares also took a small hit of 0.75 percent, ending the day at AU$37.10.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

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