Sierra Gorda feasibility study work had identified a need for significant capital expenditures in advance of receipt of pro- ject permits in order to meet the project's targeted completion date of 2013, Quadra FNX said. These expenditures would be for long-lead-time equipment and detailed engineering studies. State Grid was not pre- pared to make this financial commitment prior to receipt of all necessary permits.

Quadra FNX said the two parties will remain open to discussions once the feasi- bility study has been completed and the per- mitting process is further advanced. In the meantime, Quadra FNX is free to engage in negotiations with other parties that have continued to express interest in the project.

Quadra FNX expects the Sierra Gorda feasibility study to be completed by the end of 2010. The estimated total cost for the project, up to the commencement of pro- duction, remains in the $2-billion range.