Solomon Islands nickel ore legal fight nears decision – by James Regan (Reuters India – June 12, 2014)

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SYDNEY, June 12 (Reuters) – A court ruling in the Solomon Islands may finally unlock a large nickel deposit that geologists have known about for half a century but have been unable to exploit because of ownership changes and legal wrangling.

Japanese giant Sumitomo Metal Mining and tiny Australian explorer Axiom Mining are fighting over the Isabel nickel laterite discovery and will submit final arguments to the Solomon Islands High Court on June 23, following a court case that has already run for 88 days.

A ruling is expected soon after and could lead to development of the deposit, at a time when nickel prices have soared following a ban in January on ore exports by Indonesia, the world’s biggest supplier.

Analysts estimate Isabel compares in size or grade to other large South Pacific nickel mines, such as Vale SA’s Goro mine in New Caledonia and the China-owned Ramu mine in Papua New Guinea.

Axiom, with a market value of just A$55 million ($52 million), would aim initially to ship unprocessed ore within two years to hungry Chinese buyers to make nickel pig iron.

Sumitomo, a metals major and Japan’s No. 2 copper producer, has indicated it is interested in a larger, long-term development to produce refined metal.

“We have a fast-track program to move to mining,” Axiom’s managing director Ryan Mount told Reuters. “There’s obviously been a bit of a frenzy in the last six months to secure supply, especially among nickel pig iron smelters in China.”

Nickel prices on the London Metal Exchange have risen a third so far this year, while the price of raw nickel ore has quadrupled as Chinese buyers seek supplies, Mount said.

At these prices, the operation could generate around $50 million in cash flow a year, helping the company raise cash for a potentially larger operation at a later date, he said.

Sumitomo said the deposit was still in the exploration stage and the company, which has exploration rights over other deposits in the region, would decide whether to undertake a broad feasibility study.

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