Magna Mining has signed a memorandum of understanding (MoU) with Mitsui for a proposed joint venture (JV) arrangement for the Shakespeare mine in Canada.

The MoU allows the two firms to discuss the potential for Mitsui to purchase a stake between 10% and 12.5% in the Shakespeare Ni-Cu-PGM Mine for cash consideration ranging from $8m to $10m.

The non-binding MoU, however, is restricted to a 2,590ha area of the over-18,000ha Shakespeare Project.

Magna Mining said that the MoU covers the existing Shakespeare deposit, the proposed location of the Shakespeare open pit mine, mill, tailings storage facility and the adjacent claims.

In connection with the transaction, Magna Mining will sign a JV agreement with Mitsui to develop the Shakespeare Mine. Magna will serve as project operator.

Magna Mining CEO Jason Jessup said: “This MoU is the beginning of what we hope will be a long-term partnership between Magna Mining and Mitsui, the objective of which is to create the next nickel producer in the world-class nickel mining region of Sudbury, Ontario.

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“We anticipate that coupling our operational and geological expertise with Mitsui’s balance sheet strength is a perfect combination in furtherance of advancing the Shakespeare Mine into production and developing a significant nickel producing company.”

Each JV partner will have the offtake right for the products, including nickel, copper and/or other by-products from the Shakespeare Mine pro-rata to their ownership percentage in the JV.

Magna will continue to own a 100% stake in the remainder of the Shakespeare Project and regional exploration targets such as the P-4 Discovery.

Each of the JV participant will retain the offtake right in the produced products, including nickel, copper and/or other by-products, from the Shakespeare Mine located 70km south west of Sudbury.

Furthermore, Magna and Mitsui will jointly evaluate the potential for the latter to acquire an additional 12.5% to 15% in the JV, before the start of the construction work.

The transaction is conditional on Mitsui’s due diligence completion, signing definitive agreements between the two parties, and receipt of all regulatory approvals and third-party consents.

Magna, however, said that there is no certainty that the MoU will lead to the completion of the deal.