ÿaldag Off-take Termination Agreement and Bridging Facility Agreement
Signed>
ÿaldag Off-take Termination Agreement and Bridging Facility Agreement Signed
(Thomson Reuters ONE) - 8 July 2009 - London: European Nickel PLC ("European Nickel" or the"Company") (AIM, PLUS: ENK) is pleased to announce it has signed anagreement (the "Termination Agreement") with BHP Billiton pursuant towhich BHP Billiton has agreed to release the Company from all of itsobligations under the off-take agreement announced in June 2006 (the"BHP Off-take") in relation to the Company's ÿaldag project inTurkey. As previously announced and in accordance with the heads ofagreement (the "Off-take Heads") signed with Jiangxi Rare Earth andRare Metals Tungsten Group Company Limited ("JXTC") in December 2008,following signature of the Termination Agreement European Nickelintends to enter into a new off-take agreement with JXTC.The Company has also signed a US$4 million Facility Agreement withEndeavour Financial Corporation ("Endeavour") to provide bridge loanfinance pending completion of the proposed US$20 million equityinvestment by JXTC in ÿaldag.Termination AgreementPursuant to the Termination Agreement, BHP Billiton has agreed toterminate its entire off-take contract with European Nickel withimmediate effect. In accordance with the Off-take Heads which fixedthe terms of the off-take, the directors of the Company anticipatethat the negotiations with JXTC will lead to a new off-take agreementwhereby JXTC will agree to take 100% of ÿaldag's mixed hydroxideproduct. The successful conclusion of negotiations with BHP Billitonis an important step towards finalising the acquisition by JXTC of a20% equity interest in ÿaldag and the progression of the debt financefacility being arranged by China Tianchen Engineering Company.Originally, only 50% of ÿaldag's off-take was going to be sold toJXTC but this has been increased to 100% by mutual agreement tofacilitate the 100% debt financing of the project from a Chinesebank.The terms of the termination of the BHP Off-take are a payment ofUS$10 million on first drawdown of the project finance facility and afurther 24 monthly payments of US$1 million, starting once nickeloutput has reached 50% of the ÿaldag plant's design specification of20,400 tonnes per annum of contained nickel. The maximum fundingcost of the ÿaldag project has not increased as a result of thepayments due pursuant to the Termination Agreement. The initialpayment of US$10 million to BHP Billiton is more than offset by thereduced current market prices of consumables at the ÿaldag project,particularly sulphuric acid where the price has dropped verysignificantly since the estimate used in the last announced projectevaluation (see press release dated 19 February 2009). The monthlypayments start after maximum drawdown and are treated as operatingcosts.The payment terms agreed in the Off-take Heads are confidential butthe overall impact of the Termination Agreement is beneficial for theÿaldag project and will assist the Company to complete the financingof the project.JXTC can now apply for approval from the Jiangxi ProvincialGovernment to invest US$20 million to acquire a 20% equity interestin the ÿaldag project.Facility AgreementThe Company has signed a bridge loan facility agreement (the"Facility Agreement") with Endeavour for a US$4 million secured loanfacility (the "Loan") to provide bridge finance to the Company forworking capital until completion of the US$20 million equityinvestment by JXTC in ÿaldag. The Loan is conditional on thecompletion of certain conditions precedent.Under the terms of the Facility Agreement, the Company has grantedEndeavour a three year option to purchase 800,000 ordinary shares inthe Company ("Shares") at a price of 6.644 pence per share. Thecoupon on the Loan is 10% and the Loan is repayable on 20 October2009, unless it is extended at mutual consent. A further three yearoption to purchase 3,200,000 Shares will be granted to Endeavour ondrawdown of the Loan.In addition, the Company has appointed Endeavour as financial adviserfor the US$350 million project financing of the ÿaldag project.Simon Purkiss, Managing Director of European Nickel said, "Finalisingterms with BHP Billiton for the release of the off-take contract isan important milestone as it now allows JXTC to move ahead with theapproval process for their investment in ÿaldag and for the nextstage in the application for the US$350 million of project financingto commence.JXTC have indicated the Jiangxi Provincial Government approvalprocess can now move forward and I am confident that we can progressthe conclusion of the US$20m share purchase and that the debt financewill be completed by the end of the year. With the current timing,we have taken the opportunity to arrange a loan facility to provideadditional resources for the coming period. We would like to thankBHP Billiton for their support in the development of European Nickelto date."For more information, please visit www.enickel.co.uk or contact:Simon Purkiss or Andrew Lindsay, European NickelTel: +44 20 7290 3130Mike Jones or Andrew Chubb, Canaccord AdamsTel: +44 20 7050 6500Alex Buck, BuckBiasTel: +44 7932 740 452About European NickelEuropean Nickel (AIM, PLUS: ENK) is an emerging mid-tier nickellaterite producer focused on growth. With over 1 million tonnes ofnickel resources and assets in Turkey, the Philippines and Albania,European Nickel is targeting 50,000 tonnes of annual nickelproduction within five years. The ÿaldag project in Turkey is theCompany's flagship asset with near-term production and will be theworld's first commercial scale nickel laterite heap leach operation.Note to Editors:Endeavour Financial Corporation (TSX: EDV) www.endeavourfinancial.comEndeavour is an independent merchant banking company focused on theglobal natural resources sector. The Corporation offers advisoryservices in project, corporate and debt capital markets; equityfinancings; mergers and acquisitions; and strategic businessdevelopment. Endeavour also provides equity and bridge loans insupport of clients, transactions, and other market opportunities.Accessing its global industry networks, Endeavour creates andlaunches new growth companies as both an advisor and investor.---END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
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Datum: 08.07.2009 - 08:17 Uhr
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Signed>"
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