European Nickel completes first shipment from Santa Cruz

AIM-listed European Nickel announced today that it had completed the first shipment of nickel laterite ore from DMCI Holding's Santa Cruz port on 30 June.

The total shipment was 51,509 tonnes, of which 26,524 tonnes was from Acoje with the remainder being stockpiled ore from another operation.

The company also confirmed that Constantia Resources has terminated its agreement to subscribe to $55 million (£34.4 million) of shares at a price of 44p to fund the equity portion of the Caldag project financing in Turkey. It does, however, retain 7.44% of the company.

European Nickel has previously advised shareholders that it believes greater Turkish participation is key to obtaining value from the Caldag project, which ran into trouble when the Turkish government dragged its feet over crucial forestry permits.

It has entered into discussions with Turkish entities regarding the sale of an interest in the Caldag project and begun a project review which will include looking at various alternate processing routes such as those being trialled at its Acoje project in the Philippines.

Meanwhile, the nickel extraction at Acoje is running to schedule with extraction of 21% after 70 days.

Analyst view

Louise Collinge at Evolution Securities believes that European Nickel's shares may be undervalued now it has drawn a line under the problematic Caldag project. She points to the "solid" progress of the Acoje project as positive news.

"It appears very possible that the group will be able to generate value from this project by an outright sale or by bringing in a suitable partner which could enable its advancement," she said.