JOHANNESBURG (miningweekly.com) – ASX-listed Altona Mining has signed a binding framework agreement with Chinese road, bridge and rail construction company Sichuan Railway Investment Group (SRIG) to establish an incorporated joint venture (JV) holding Altona’s Cloncurry copper/gold project, in north-west Queensland.
As part of the JV, SRIG would contribute cash of $214.46-million and have a 60% interest, while Altona would retain the remaining 40% interest, contributing $38-million.
The transaction valued the Cloncurry project on a precash contribution basis at $105-million.
Altona can meet its immediate obligations under the agreement from its existing A$47-million of cash resources.
The Cloncurry project offered a large resource of 287-million tonnes at 0.6% copper, 0.04 g/t gold for 1.65-million tonnes contained copper and 0.4-million ounces gold.
“On completion of the transaction, the project will be fully funded to production without recourse to equity or debt markets. The joint venture will have $252-million in cash. Once the project is in production, it will sustain 280 new direct jobs,” Altona Mining MD Dr Alistair Cowden said.
Meanwhile, the JV would also seek to develop a mine at Altona’s Little Eva deposit, the largest in the Cloncurry project.
A definitive feasibility study anticipated the construction of a 7-million-ton-a-year openpit flotation and mine plant, capable of producing 39 000 t/y copper and 17 000 oz gold over an initial mine life of 11 years.
AGREEMENT TERMS
SRIG would pay a $2-million deposit to secure an eight-month exclusivity period, followed by payments in two tranches. The first tranche of $199.5-million would be paid after execution of formal documentation and satisfaction of all conditions precedent, which included SRIG confirmatory due diligence, completion of an independent valuation exceeding $105-million, completion of formal documentation, Chinese regulatory approvals and approval from the Australian Foreign Investment Review Board.
The second tranche of $14.96-million would then be paid 12 months later.
Altona’s contribution would also be paid in two tranches, comprising $28-million and $10-million, matching SRIG’s contributions on completion and 12 months thereafter.
The parties targeted the execution of the formal agreements by November 30 and a close of the transaction prior to February 2016.