Photo by: Bloombeg
PERTH (miningweekly.com) – ASX-listed Centaurus Metals has moved on diversifying its portfolio, announcing on Thursday that it had signed a strategic alliance with Brazilian explorer Terrativa Minerais SA.
Under the proposed alliance, Centaurus would enter into a new joint venture agreement to earn an 80% stake in the Aurora copper project, in Brazil, secure a favourable restructure of an existing option agreement over the Conquista direct shipping ore (DSO) project and the Mombuca gold project. The company sought to attract a sizeable equity contribution from Terrativa’s CEO.
Following the completion of these transactions, Terrativa would emerge with an 18% to 19% shareholding in Centaurus, making it the company’s largest shareholder.
Centaurus MD Darren Gordon said on Thursday that finalising the terms of the strategic alliance marked a significant turning point in the company’s fortunes as it moved to realise value from its existing iron-ore assets and repositioned itself for growth.
“We are delighted that a Brazilian group of the quality and stature of Terrativa intends to become a major shareholder of Centaurus under the proposed strategic alliance.
“This reflects Terrativa’s confidence in the experience of our in-country team in Brazil, the quality of our exploration work, the depth of our project portfolio and the opportunities which lie ahead for Centaurus.”
Gordon said the Brazilian firm’s willingness to cooperate on the restructure of the existing option agreements over the Conquista and Mombuca projects spoke volumes for the inherent value of the assets and had the potential to open doors to assist Centaurus to extract value from both projects, as well as the much larger Jambreiro iron-ore project.
At the Mombuca gold project, the previously agreed option exercise payment would no longer be required and Terrativa would instead take a 2% production royalty over any future mineral sales from the tenement.
In the event that the tenement was sold to a third party, Terrativa had the option to forego the production royalty in favour of a 25% share of the sale proceeds received by Centaurus.
At the Conquista project, the strategic alliance provided for an early exercise of Centaurus’ option through the issue of new shares, allowing the company to direct any future expenditure on the project towards value-adding exploration activity.
Owing to the quality of the Conquista DSO project, the shares would be issued to Terrativa at a 30% premium to the five-day volume-weighted average price of Centaurus shares immediately prior to the announcement of the strategic alliance, with the shares to be voluntarily escrowed for 12 months.
The share issue would, however, be subject to shareholder approval.
Centaurus has told shareholders that the Conquista DSO project had the ability to become a significant cash generator in the near future, as demonstrated by the continued strong level of interest shown by location operators and the positive economics seen in similar, smaller DSO operations as a result of favourable currency movements and domestic iron-ore price levels.