JOHANNESBURG (miningweekly.com) – Aim-listed Weatherly International will acquire the Kitumba copper project in Zambia from ASX-listed Intrepid Mines for an upfront cash consideration of A$4.75-million.
The company on Tuesday announced that it had entered into a binding agreement with Intrepid to buy the project, with the transaction being subject to certain conditions precedent, including shareholder approval and any regulatory approvals required in Zambia and Australia.
Other than the cash consideration, the key terms of the transaction include a deferred consideration of A$500 000 upon a decision to mine and a further A$500 000 upon achieving commercial production.
Meanwhile, Weatherly has obtained a waiver from Orion Mine Finance to use part of the uncommitted $10-million loan, announced in July, to fund the transaction to the extent that the company is unable to fund it through operating cash flows.
However, Weatherly stated that the company and its subsidiaries are unlikely to generate sufficient surplus cash to meet all loan repayments when due, particularly in the near term, and therefore continues to positively engage with Orion on the subject.
On Monday, the company posted losses of about $40.1-million from $10.6-million for the year ended June 30, despite a revenue increase to $75.1-million from $63.7-million.
The advanced Kitumba copper development project hosts a Joint Ore Reserve Committee- (Jorc-) compliant measured and indicated resource of 24.9-million tonnes at a copper grade of 2.32% containing 578 000 t of copper. Included within this resource is a Jorc-compliant reserve of 21.9-million tonnes at a copper grade of 2.20% copper containing 492 000 t of copper.
The Kitumba deposit is contained within a granted mining licence that is valid until 2029, while the wider project area also includes four exploration licences, with a combined current mining and exploration tenure area covering more than 900 km2.
To date, an estimated $30-million or more has been spent on exploration, drilling, metallurgical testwork and other studies for Kitumba. The purchase includes a fully established exploration camp on site.
The development of the Kitumba mine is also already environmentally permitted, based on the development plan proposed by Intrepid.
Weatherly noted on Tuesday that the transaction was consistent with the company's stated strategy of pursuing growth through developing and operating profitable medium-scale base metals mines in lower-risk parts of Africa.
“The Kitumba project is an excellent fit for the project development and operational mining capabilities of Weatherly in the Southern African region, and the company is confident in its ability to rapidly advance the project towards construction and production in the near term,” said Weatherly.
Zambia is a well-established mining jurisdiction and the second-largest producer of copper in Africa.