Shares in European Nickel (LON:ENK) slumped by 27% to 23p in early trading today after the AIM listed exploration group said it had been forced to put its flagship Çalda? project in Turkey on care and maintenance until receipt of a re-issued forestry permit. The relevant licences were originally approved by Turkey’s Environment and Forestry Ministry in April 2009. Subsequent political wrangles inside the country led European Nickel to concede in May this year that those permits would be revoked so that they could be re-issued under new mining laws in the country. In today’s update, the company said it could no longer wait around for the new permit and would instead turn its attention to fast tracking a definitive feasibility study for the Acoje nickel laterite project in the Philippines.

Çalda? has been progressed to the point whereby the major outstanding item to completing the project financing with Western Bank and commencing development of the project is the re-issuance of the forestry permit. Despite repeated assurances from government officials that the permit will be re-issued, this has not yet occurred. As a result, the company has suspended the project financing process and said it would re-assess the situation once the permit is re-issued.

In connection with this news, European Nickel reported that, by mutual agreement, a Çalda? off-take contract with BHP Billiton (LON:BLT) for 100% of the mixed hydroxide product (MHP) had been terminated. The Çalda? MHP is an extremely high grade concentrate, with a contained metal value of around 35% and there is a global shortage of good quality nickel feed. It is understood a number of parties have expressed interest in securing an off-take agreement for the Çalda? MHP and the company is planning to recommence negotiations once the forestry permit has been received.

The fast tracked definitive feasibility study at Acoje will begin with the start up of a heap leach trial facility during the first quarter of 2011. The Çalda? technical team will be transferred to the Acoje project team shortly. A significant amount of the metallurgical information that has been developed and compiled at Çalda? is readily transferable to the Acoje DFS.

The Acoje project is based on Luzon Island. A DFS commenced in March 2009,…

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