KGHM International Ltd. entered into a series of agreements with Vale Canada Limited, which provide the framework for KGHM to develop the Victoria nickel-copper-PGM project located in Sudbury, Ontario. KGHM will retain its 100 per cent ownership of Victoria, and Vale will receive a 2.25 per cent net smelter return royalty on all future production from the project. The Victoria project, which was acquired by KGHM's subsidiary, FNX Mining Company Inc. (FNX), in 2002, will be developed by KGHM as an underground mine. At the same time, KGHM and Vale re-negotiated the off-take agreement covering all of KGHM's production from its mines in the Sudbury Basin. The amended and restated off-take agreement is intended to last the full life of all of KGHM's mines in the Sudbury Basin, including future production from the Victoria project. KGHM has estimated that the contract will have a value of over US$1.13 billion over the first five years following the effective date.
Vale's legal team was led internally by Carl DeLuca, head of legal, Vale Base Metals - Canadian and UK operations; Caroline Thomas, chief legal counsel, exploration, property and aboriginal affairs; and Edward Mazey, senior legal counsel, Ontario operations. Vale was also represented by Cassels Brock & Blackwell LLP with a team of Ann Watterworth, Brian Dominique and Mickey Lungu.
KGHM was represented by Blake, Cassels & Graydon LLP's Andrew McLeod, Susan Tomaine and Steve McKoen in Vancouver and John Hutmacher in Toronto.