JOHANNESBURG (miningweekly.com) – ASX-listed copper miner Altona Mining on Thursday announced that it had concluded negotiations with Sichuan Railway Investment Group (SRIG) for the establishment of a joint venture (JV) company that would oversee construction of a new $238.5-million copper-gold mine at Altona’s Cloncurry project, in north-west Queensland.

Altona had initially signed a binding framework agreement with the Chinese road, bridge and rail construction company in June last year.

Since doing so, SRIG had completed extensive due diligence, including diamond drilling, metallurgical testwork, and technical, legal and financial reviews – the positive outcome of which enabled the parties to finalise the relevant agreements.

Some of the commercial terms of the final agreement differed from the initial framework agreement, including a reduction in Altona’s cash contributions from $38-million to $25-million; as well as a reduction in the copper miner’s equity in the JV company, which went down from 40% to 34%.

SRIG’s cash contribution of $213.53-million was unchanged at $215-million, while its JV company equity increased from 60% to 66%.

Altona MD Dr Alistair Cowden noted that the financing structure for the new mine delivered higher and more immediate returns to Altona shareholders compared with conventional debt/equity mining project financing.

“The project is significant for Queensland, bringing approximately 300 construction jobs. And when in production, it will sustain approximately 280 new direct jobs,” said Cowden, adding that, on closing of the transaction, the project would be fully funded to production.

PROJECT DEVELOPMENT
Altona and SRIG intended to develop a seven-million-tonne-a-year openpit mine and flotation plant capable of producing 39 000 t/y copper and 17 000 oz gold over an initial mine life of 11 years.

The JV company, Roseby Copper, would own the Cloncurry project, with $238.53-million, or A$329-million, in cash at closing. The cash exceeded the previous estimate for capital costs of A$294-million, including A18-million contingency, and it was expected that the ultimate capital costs would be materially lower, given the current depressed market for mining construction.

Altona would manage Roseby Copper for three months from its establishment, after which the JV company would have its own management in place.

Altona’s 34% equity share of yearly production from the Cloncurry project equated to about 13 000 t of copper and 5 780 oz of gold, representing significant potential cash flow attributable to Altona.