BUCKO LAKE MINE - MANITOBA
The Company's 100% interest in Bucko Lake Mine was acquired from Xstrata Nickel ("Xstrata") in 2007. Pursuant to the transfer agreement, sales agreements and subsequent amendments to those agreements,
- Xstrata retains a Back-in Right to back in 50% interest in and to become the operator of Bucko Lake Mine by paying to the Company an amount equal to the aggregate of all direct expenditures which were incurred by the Company in carrying out the mining operation at Bucko Lake Mine prior to the date of exercise of the Back-in Right;
- Xstrata is entitled to a 2.5% net smelter royalties ("NSR");
- Upon commercial production (declared in June 2009), a royalty payment of $500,000 is payable to Xstrata;
- Xstrata will purchase 100 percent of the nickel concentrates at commercially competitive terms over the life of Bucko Lake Mine.
The Company's (CaNickel and formerly known as Crowflight) interest in the Bucko Lake mining lease is subject to a back-in right held by Xstrata In the event that the Company identifies a new deposit (in addition to the Bucko Lake Mine) with estimated measured and indicated resources in excess of 200,000,000 pounds of Nickel, Xstrata has the right to purchase a 50% interest in the property and to become the operator of the new deposit in consideration for a payment to the Company of an amount equal to the aggregate of all direct expenditures that were incurred by the Company in carrying out mining operations on the Bucko Lake Lease outside of the Bucko resource block prior to the date of exercise of the back-in right. Accordingly, the potential benefit to Company of any discovery of a significantly increased deposit will be limited to a 50% interest in the project.
Bucko Lake was declared commercial production in June 2009, but was suspended twice - once in November 2009 (News Release November 16, 2009) and once in October 2010 (News Release October 1, 2010) for numerous reasons. In April 2011, the Company resumed the mining operation at Bucko Lake using its own mining equipment and assembling its mining crew.
The estimated mineral reserves and resources at Bucko Lake Mine at December 31, 2008 are summarized as follows, and contained in the technical report entitled "Technical Report regarding an Update to Reserves and Resources for the Bucko Lake Nickel Project, Wabowden, Manitoba" dated March 31, 2009, prepared by J. Gregory Collins, former officer of the Company, Paul D. Keller, former officer of the Company, Martin Drennan of Python Mining Consultants Inc. and Eugene J. Puritch of P&E Mining Consulting Inc., filed on CaNickel's profile on SEDAR at www.sedar.com (News Release March 12, 2009).
Estimated Mineral Reserves and Resources at Bucko Lake Mine
as at December 31, 2008¹
(000 000 lbs)
|Total Measured and Indicated Resources||1.0%||2,759,000||1.53||93.1|
|Total Inferred Resources||1.0%||5,468,000||1.34||161.6|
¹Resources are in addition to reserves.
No reconciliation has been done to reconcile the above estimated mineral reserves and resources with the production activities at Bucko Lake Mine since December 31, 2008.