European Nickel Suspends Work on Turkish Mine

LONDON, Dec 13 -- European Nickel (ENK.L) said it has suspended work on its flagship Caldag project in Turkey as it awaits a forestry permit and that a supply agreement with BHP Billiton (BHP.AX)(BLT.L) has been terminated.

It said on Friday the re-issuance of the forestry permit was the major outstanding item to completing the Western Bank project financing.

"Despite repeated assurances from government officials that the forestry permit will be re-issued, this has not yet occurred," the company said. "The board has now decided to put Caldag on care and maintenance and suspend the project financing process until such time that it receives the outstanding forestry permit."

In October, the group said it expected production from the mine to start in 2012 rather than 2011. [ID:nLDE6961XA]

It now plans to fast track a definitive feasibility study for the Acoje nickel project in the Philippines.

Caldag is expected to produce 20,000 tonnes a year of nickel and 1,000 tonnes per annum of cobalt.

The company said a contract to supply BHP Billiton from Caldag has been terminated by mutual agreement, adding that a number of parties have expressed interest in securing an off-take agreement. Talks will resume once the forestry permit has been received.