JOHANNESBURG (miningweekly.com) − JSE- and Aim-listed Petmin on Monday said that it had entered into an earn-in agreement with TSX-listed base-metals junior Red Crescent Resources to gain access to its Sivas copper project in Turkey.

The transaction would see Petmin invest an initial C$4,64-million to acquire a 10,1% stake in the company, of which, C$3-million would be invested directly into the Sivas project.

Petmin would then have the option of investing up to C$17-million in the project over a three-and-a-half year period to earn up to 37,5% in the project.

The buy-in would occur in four stages, subject to certain mineral measurement criteria. Petmin chairperson Ian Cockerill said that he was confident that all earn-in funding could be comfortably paid from the company’s cash resources.

He said that the investment into the Sivas project represented an early-stage, low-risk and cost-effective entry into a potentially highly-prospective and scalable copper venture.

“It represents further progress on our stated intention of investing in a suite of commodities used specifically in the urbanisation and infrastructure development space, and in expanding our global footprint,” said Cockerill.

The project is located north-east of central Turkey and includes the rights to three contiguous and adjacent mining licences covering an area of about 5 240 ha. Red Crescent also has two other zinc projects in the region.

Red Crescent CEO and chairperson Alan Clegg said that the company would fast-track its strategic copper asset to make a development decision within three years.

After the completion of the prefeasibility study, a bankable feasibility study would be commissioned and financed pro-rata according to the parties’ direct shareholding in the Sivas copper project at the time and development could start in about three years time.

Cockerill believed that such an early development decision was possible seeing that Noranda Minerals/Falcon Bridge had already done a lot of previous work on the Sivas project.

The copper industry has been seeing strong growth of around 3% a year for more than 15 years already, and Cockerill is upbeat about prospects, as supply was struggling to keep up with demand. But he did not believe that the current high copper price, which hit fresh records this year, was sustainable.

He added that Petmin was focused on being a low-cost producer in the lower quarter of production costs.

Petmin is also engaged in exploration and organic expansion of iron-ore, mineral sands and anthracite projects in South Africa, Canada and Liberia.

Cockerill noted that the R120-million Somkhele expansion project in South Africa, would start production by the first quarter of 2012, and significantly increase Petmin’s cash flow, which it would use to help fund some of its other projects.

“Our Business of Tomorrow growth strategy is to significantly increase the size of the company through organic and acquisitive growth, in order to deliver sustainable value to our stakeholders by focusing on a combination of cash-producing assets, near cash projects and targeted exploration programmes. The Sivas copper project has the potential to add value to our growing pipeline of projects,” concluded Cockerill.
 

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