Photo by: Bloomberg
PERTH (miningweekly.com) – Australian explorer AusAmerican Mining has moved to acquire a majority shareholding in private Chinese company Shenglong International Investments, which holds exploration assets and a direct shipping ore- (DSO-) producing asset in the Republic of Congo.
Under the terms of the transaction, AusAmerican would acquire a 77.58% shareholding in Shenglong for a total of $103.44-million, which would be paid to the vendor over a two-year period, starting this year.
Using the last day of Paydirt’s African Downunder conference, in Perth, AusAmerican executive chairperson Peter Landau stated that the company would fund the cash payment from a $60-million project finance facility, which was yet to be secured, while the balance of the payments would be funded from ongoing operations at the Moubiri DSO mine, which formed part of the transaction.
“This acquisition, together with discussions on acquisition and development funding represents a transformative milestone for the company,” said Landau.
Shenglong owns Congolese company Societe Lulu de Mine, which, in turn, holds a 90% interest in the two polymetalic exploitation permits that include the Moubiri DSO project and the Mindouli copper project.
The exploitation permits cover some 372 km2, and are valid until 2036, with Landau telling delegates at the conference that the projects would also be exempt from taxes for the next ten years.
The Moubiri project is a copper/lead/zinc DSO asset currently producing at a rate of 50 t/d, and Landau believed that the company could ramp up production to around 200 t/d in the short-term with a capital investment of A$2-million, to provide significant cash flow margins for the company.
The project could further increase production to 500 t/d with further investment.
The Mindouli project, in turn, is a large, high-grade sandstone and limestone-hosted copper deposit, which has an exploration target of between 15-million and 30-million tonnes, grading at between 3% and 5% copper.
“Mindouli is a development project with significant exploration and feasibility work undertaken to date and, importantly, a clear path forward to establish the next stage forward for development,” said Landau.
Meanwhile, AusAmerican had started discussions with several international trading commodity houses to secure a $60-million copper/lead/zinc prepayment facility to fund the transaction.
Landau pointed out that discussions had involved the company providing an exclusive offtake agreement for the life of the Moubiri mine in return for providing the company with the prepayment loan.
Should AusAmerican be unable to raise the initial funding to pay the vendor for his shareholding in Shenglong, the transaction would not proceed.