Brazil's Vale do Rio Doce has pulled out of the planned $1.5 billion Kalgoorlie nickel laterite project in Australia, which it had planned to undertake with another Australia miner, Heron.
Heron Resources is now the full owner of the project of which Vale and BHP Billiton had once vied to gain control. However, Vale pipped BHP to sign a joint agreement in 2005, and further cemented the deal by picking up a 13.4-per cent stake in Heron.
BHP upped the ante with taking up a 15.6-per cent stake in Heraon but then chose to develop its own Ravensthorpe nickel project, which was recently closed after it had spent $5 billion. The future of both the Vale and BHP shareholdings in Heron remains uncertain, but chances of any party exiting in the a hurry seem remote given the shareholdings offer a foothold on a world-scale 7 million tonne nickel resource.
Heron shares fell 3 cents to 17 cents with the departure of Vale. The group now intends to find a new joint partner possibly a Chinese company or a consortium of nickel end-users.
Meanwhile, the benefit of Vale's $34.5 million expenditure on feasibility studies has passed on to Heron. Vale's exit from the project is being attributed to the funding for the next stage covering full-feasibility-study stage that would need $50 million.
Meanwhile Heron has said it remained "committed to the belief that there is significant scope to develop a world-class nickel project". The company has $30 million in cash and plans for optimisation of the work carried out by Vale.
Heron said it will now focus on revising the resource estimates of the project and reviewing pit optimisations. It will also look at mine scheduling and include further deposits within the overall operation.