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. Last Updated: 07/27/2016

Norilsk Strikes Deal in Canada

NEW YORK -- Norilsk Nickel has agreed to acquire a stake in Canadian Royalties and buy metal from the company's $466 million Nunavik project in Quebec.

The nickel concentrate will be sold under terms "highly competitive with market rates," Canadian Royalties said in a statement Monday. Norilsk will pay 25 million Canadian dollars ($25 million) for 7.25 million shares at 3.45 Canadian dollars each, 23 percent more than the Sept. 28 closing price.

"Forming this strategic partnership with Norilsk Nickel reduces several project risks, including risks related to the financing of the project," Canadian Royalties chief executive Richard Faucher said in the statement.

Nunavik is scheduled to start production in the second quarter of 2010. Annual output will average 11,800 metric tons of nickel, 17,600 tons of copper and 425 tons of cobalt in concentrate in the first four years, Canadian Royalties said on its web site. The mine also will yield 14,500 ounces of platinum and 78,600 ounces of palladium a year, the company said.

Canadian Royalties is in talks with five banks on financing for the project, said Jens Zinke, the company's vice president of business development.

Terms of a loan agreement will be decided within "days or weeks," and permits for construction will probably be issued by the start of next year, he said.

Canadian Royalties said it may request a loan of 25 million Canadian dollars from Norilsk to finance completion of the project.

Norilsk in 2003 acquired a controlling stake in Stillwater Mining to add mines in the United States.