Falcondo (Nickel), Dominican Republic
| Holding: | 4.1% Equity Interest |
|---|---|
| 2009 Revenue: | Project on care and maintenance |
| Operator: | Xstrata plc |
Franco-Nevada has an approximate 4.1% equity interest in Falcondo Dominicana, C. por A. (“Falcondo”) which owns and operates an integrated complex of mines, smelter, crude oil supply system, oil refinery and power plant. Xstrata plc (“Xstrata”) has an 85.26% equity interest in Falcondo. Revenue is received through discretionary dividend distributions on Falcondo’s common shares. The operation has been producing ferronickel with some intermittent production halts since 1971. Production was initially suspended in 2008 and then put under indefinite care and maintenance due to adverse nickel market conditions and high oil prices. Falcondo has had previous market related suspensions from which is has successfully restarted. Franco-Nevada did not receive any dividends from Falcondo in 2009 and does not expect to receive any dividends until nickel prices improve and operations are restarted.
In December 2009, Xstrata announced that it is expecting to complete a feasibility study in 2010 to transform Falcondo from a swing producer into a sustainable low-cost operation requiring minimal capital outlay. Xstrata envisages converting the plant to natural gas and optimizing mining/plant processes with the target of $4.00-$4.50/lb nickel). Xstrata stated reserves to be 74Mt at 1.3% nickel and resources of 76.8Mt at 1.5% nickel with an anticipated mine life exceeding 20 years at more than 28,000 tpa nickel output and with growth potential.