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6 E&MJ; • JUNE 2014 www.e-mj.com NEWS-LEADING DEVELOPMENTS anteed by EFIC and the government of South Australia will contribute about A$291 million. And third, Nyrstar intends to enter into a transaction for the forward sale of silver output from the redeveloped Port Pirie facility for an upfront payment of about A$120 million. Nyrstar forecasts operating costs/mt of market metal at Port Pirie will decline by about 20% in local currency terms once the project is fully operational, which will in turn drive improved EBITDA and free cash flow. The company expects the project to generate a post-tax lever- aged IRR of 25% to 30%, using internal economic and flat metal price assump- tions for the duration of the project. BHP Billiton Reviewing its Nickel West Business BHP Billiton announced on May 14 that it is reviewing its Nickel West business unit. Nickel West's assets are all in Western Australia and include a large, open-cut nickel mine and concentrator at Mount Keith, two underground nickel mines and a concentrator at Leinster, a nickel concen- trator and smelter that produce nickel con- centrate and nickel matte at Kalgoorlie, and a nickel refinery at Kwinana that processes nickel matte into LME-grade nickel briquettes and nickel powder, as well as a range of saleable co-products. Nickel West produced 78,200 metric tons (mt) of contained nickel in the nine months ended March 30. BHP Billiton's review is considering all options for the long-term future of Nickel West, including the potential sale of all or parts of the business, and follows a decision to cease operations in the sub- level cave at the Leinster Perseverance underground mine due to safety concerns in December 2013. "The review of the Nickel West busi- ness is consistent with the company's long held practice of continually review- ing its operations, although it will only pursue options that maximize value for BHP Billiton shareholders. Any potential course of action remains subject to detailed analysis and an assessment of alternatives," the announcement said. Rio Alto and Sulliden Combine to Create Peru-focused Company Rio Alto Mining, headquartered in Van- couver, Canada, and Sulliden Gold Corp., headquartered in Toronto, have announced an agreement to combine their companies. Their primary assets are Rio Alto's La Arena oxide gold mine and Sulliden's Shahuindo gold development project, located approximately 30 km from each other in north-central Peru. The proximity of the two projects is expected to create a variety of opportuni- ties to unlock value through capital, oper- ational and other regional synergies. La Arena started production in May 2011 and poured 214,742 oz of gold in 2013. The property has measured and indicated resources of 5.2 million oz of oxide gold (100.2 million metric ton (mt) grading 0.41 g/mt gold) and 3.8 million oz of gold and 3.7 billion lb of copper in sulphides (561.7 million mt grading 2.1 g/mt gold and 0.3% copper). Sulliden completed a feasibility study of the Shahuindo project in September 2012, based on $1,415/oz gold and $27/oz silver, outlining a 10,000-mt/d, open-pit heap leach mine that would see production of approximately 85,000 oz/y gold over an estimated 10-year mine life. Cash costs are estimated at approximately $550/oz, based on mining 40% of the defined measured and indicated gold oxide resource. Production is currently targeted to begin by late 2015 or early 2016. Pursuant to their agreement, Rio Alto will acquire each outstanding Sulliden common share for 0.525 of a Rio Alto common share. In addition, as part of the transaction, Sulliden shareholders will receive 0.10 of a common share in a newly incorporated company (SpinCo) for each Sulliden common share held. SpinCo will hold Sulliden's 100% inter- est in the East Sullivan property in Val- d'Or, Quebec, and will be capitalized with approximately C$25 million in cash, which at Rio Alto's option may be provid- ed entirely in cash or C$15 million in cash and C$10 million in common shares of Rio Alto. The implied transaction value before ascribing any value to SpinCo is approxi- mately C$300 million. Upon completion of the transaction, Rio Alto shareholders and Sulliden shareholders will own approximately 52% and 48%, respec- tively, of the outstanding Rio Alto com- mon shares. Rio Alto President and CEO Alex Black said, "This transaction represents a logical combination for Rio Alto given the complementary nature and proximity of our respective operations. We are look- ing forward to expanding upon the excel- lent work completed to date by the man- agement team of Sulliden and believe the development of Shahuindo leverages our core strengths as an organization and is analogous in many respects to our La Arena mine, which was built on time and on budget and has continuously outper- formed expectations." The transaction will be carried out by way of a court-approved plan of arrange- ment and will require the approval of at least 66 2/3% of the votes cast in person or by proxy of the shareholders of Sulliden at a special meeting to be held no later than July 30. The transaction is also subject to obtaining approval by a majority of votes cast by the shareholders of Rio Alto at a special meeting of Rio Alto shareholders expected to take place on or about the same date as the Sulliden meeting. Nyrstar estimates its A$514 million redevelopment project at Port Pirie will increase plant throughput by about 50%. 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