PERTH (miningweekly.com) – ASX-listed Winmar Resources has signed a head of agreement with African Holding Investment Company for a 50% interest in the Luapula cobalt processing facility, in the Democratic Republic of Congo.
The processing facility, which was constructed in 2014 at a capital cost of $80-million, is a conventional copper/cobalt leaching plant with a throughput capacity of 250 000 t/y of run-of-mine (RoM) feed. The plant has the capacity to produce 12 000 t/y of high-grade concentrates, comprising a 30% to 40% cobalt hydroxide product and a 15% to 20% copper hydroxide product.
Under the terms of the agreement, Winmar will acquire a 50% interest in the joint venture (JV) company and will be the operator and manager of the JV. Winmar will supply the RoM feed from its hard rock or tailings licences, and where applicable, third party material, for the plant.
Winmar will also have the sale and marketing rights to all of the cobalt and copper concentrates produced at the Luapula processing facility.
The company will be responsible for all of the costs associated with the restart of operations at Luapula, including all capital and working capital costs, with Winmar also expected to meet the cost of optimisation work and feasibility studies for the expansion of the project to a throughput of one-million tonnes a year.
Winmar will be responsible for securing the ore feed and any related exploration costs to bring any cobalt mining operations into production.
Meanwhile, the company will be required to make a $5.5-million cash payment to acquire the 50% interest in the processing facility, to reimburse development expenditure.
In addition, Winmar will pay African Holding a royalty on sales revenue of between 1% and 3%, depending on the prevailing London Metals Exchange cobalt price in the first and third year of operations, and royalty on sales revenue between 1% and 2%, depending on the prevailing cobalt price in years four to ten, and 1% for years 11 to 15.
Winmar will retain the right to pre-pay the royalty in years 11 to 15 by making a single cash payment of $9.5-million at any time during the first 12 months of the JV, subject to the application of the ASX listing rules, and shareholder approval if required.
Share-based payments will also be made to African Holdings for the 50% interest, including 100-million fully paid ordinary shares on the execution of a JV and development agreement, a further 100-million shares on the start of concentrate sales, and a further 100-million shares when the JV reaches 1 000 t of cobalt in concentrate sales.
The share issue will also be subject to regulatory and shareholder approval.
In addition to the JV agreement, Winmar has entered into two heads of agreements to acquire a portfolio of highly prospective cobalt exploration licences, which Winmar is hoping to develop to provide RoM feed for the Luapula processing facility.
The licences extend across some 500 km2 and are at various stages of exploration and development.
Winmar is expected to make a cash payment of $1.25-million to reimburse the holders of the licences for exploration and development expenditure, and further milestone-based considerations will be made on the start of mining with $15/t payable for the ore mined from the exploration licences.
Winmar on Monday said that to fund the up-front acquisition costs and the initial capital and working capital requirements of the Luapula processing facility, and the exploration acreage, the company would raise A$8-million through the issue of more than 333.3-million shares, priced at 2.4c each.
Shareholder approval will be sought for the capital raise.