JOHANNESBURG (miningweekly.com) – ASX-listed Condor Blanco Mines is advancing plans to secure €10-million in debt funding for iron-ore mining at its Marianas project, in Chile, and to progress the acquisition of a hard coking coal project, in South Africa.
Condor reported on Thursday that it was nearing completion of a full desktop review of the The Duel hard coking coal project, in Limpopo’s Soutpansberg coalfield, which it intends to buy as part of a transaction to acquire a majority stake in Hong Kong-based Signet Coking Coal.
The Australian firm has entered into a heads of agreement (HoA) with Signet, providing the exploration company the right to acquire a majority stake of up to 50.3% in The Duel and Tshipise 2 projects, held by Signet’s South African subsidiaries.
These two projects, as well as the Universal Annex and Mopane projects, made up Signet’s Soutspansberg coalfield project, which comprised five prospecting rights, most of which were contiguous.
The agreement provided for a performance-triggered option by Condor to progressively acquire additional equity in the four projects, with short-term emphasis on the highly prospective The Duel and Tshipise 2 projects.
The acquisition remained subject to several conditions precedent, including 60 days’ technical due diligence and upcoming shareholder approval.
Condor was simultaneously drafting a definitive agreement that could lead to Condor’s acquisition of a majority position in Signet and its Soutspansberg coalfield project.
The Joint Ore Reserves Committee-compliant resource drill-out and definitive feasibility study (DFS) programme for The Duel was expected to be funded by Condor, with costs expected to range from €10-million.
Both programmes would be run in parallel and were expected to be completed by November.
“[We] will then be able to continue with acquisition of additional interest in Signet subject to the terms of the definitive agreement,” the company said in a statement on Thursday.
The ASX-listed miner further reported that it had proceeded with the required documents to secure a five-year limited recourse loan of €10-million to enable completion of undertaking under the Signet HoA, as well as to develop its Marianas magnetite tailing project, in Copiapo, Chile.
Condor had also sought a debt facility, as it believed that any form of equity participation in the Signet projects would lead to lower valuations of the project compared to what would be obtained once the DFS was completed.
Condor chairperson Paul Crosio outlined that, by funding the Marianas and Signet hard coking coal initiatives through debt, the company could maintain its structure as well as preserve its ability to capitalise on the re-evaluation of The Duel project and other Signet assets.
“It is our intention to make it a priority to repay this debt through a trade sale or joint venture on The Duel project when we believe the optimal value of the project has been realised.
“If we went to the equity market at this stage, there would inevitably be minimal or no allowance for this future upside potential of Signet. Similarly, with cash in the bank, our position on Marianas is improved and we can take a more aggressive position on joint venture operator negotiations, or, if required, even operate it in our own capacity,” he commented.