Wednesday, 13 July 2011

Pure Nickel Receives Multi Million Dollar Settlement

Pure Nickel
(TSX: NIC)(OTCBB: PNCKF)
Basic Shares: 67.8 million
Fully Diluted: 75.5

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After a lengthy legal process, Pure Nickel will have a healthier bank account and closure on its claims battle in a Utah copper project.

The dispute went legal after Western Utah Copper Company (WUCC) and its parent Copper King Mining Corporation filed for bankruptcy in May 2010. The issue was that Pure Nickel's 100% owned subsidiary, Nevada Star Resources, was to be receiving royalties from production that was supposed to have started in late 2008. As a result, NIC and its subsidiary filed a statement requesting the return of the land claims.

Enter Skye Mineral Partners! It subsequently purchased the majority of the secured debt in WUCC and then approached Pure Nickel to reach a sedttlement. The terms are as follows:

1. An initial term sheet has been agreed to and a long form agreement will be negotiated as soon as possible between Skye and Pure Nickel;

2. Subject to WUCC’s exit from bankruptcy, an initial payment of two million dollars (US$2,000,000) will be made by Skye to Pure Nickel;

3. A payment of an additional one million five hundred thousand dollars (US$1,500,000) will be made twelve months from the date of the initial payment;

4. The granting by Skye to Nevada Star of a 1% NSR in all properties acquired by Skye from WUCC and Nevada Star which NSR is subject to a total royalty cap of eight million dollars (US$8,000,000).

NIC management is anticipating it will take about 90 days for the paperwork to be completed. If this is the case, the company would have the cheque in hand early in Q4. The question becomes, what will the company do with the money? We expect some clarity on that question in the not too distant future.