Aim-listed exploration and resource development company African Pioneer has signed a nonbinding term sheet with engineering, procurement and construction (EPC) and mine development group Hong Kong Xinhai Mining Services for the provision of financing and technical services to advance the Ongombo and Ongeama copper projects, in Namibia.

Under the term sheet, Xinhai has, for a nominal payment, been granted an exclusivity period of up to 60 days for the parties to enter into definitive documentation.

African Pioneer stresses that the proposals set out in the term sheet may, therefore, either not complete or be subject to material variation.

The company says, however, that the financing and technical services agreement set out in the term sheet represents a major milestone in African Pioneer's strategy to fast-track Ongombo-Ongeama into commercial copper production through a fully integrated financing, engineering, construction and commissioning solution.

African Pioneer describes Xinhai as an internationally recognised mining EPC group with an extensive global track record, having completed more than 500 EPC projects globally, including mine construction, processing plant development and operational management assignments across multiple jurisdictions.

African Pioneer chairperson Colin Bird says Xinhai’s financial strength, engineering capability and extensive operational experience provide a unique platform to unlock the full value of the company’s Namibian copper assets.

Importantly, he adds, the arrangements will embrace every critical aspect of project evaluation, development, financing, engineering, construction and commissioning under a single integrated framework.

“The objective is clear: to fast-track Ongombo-Ongeama into a modern, efficient and environmentally responsible copper mining operation in the shortest practical timeframe. Therefore, there is no requirement for additional project funding by African Pioneer if development milestones are successfully achieved,” says Bird.

African Pioneer explains that Xinhai will provide 100% of the funding required to achieve agreed development milestones.

On the execution of the definitive agreements, the company says Xinhai shall subscribe for 10% of the then-issued ordinary share capital of African Pioneer on a fully diluted basis at a subscription price of 1.15p a share – subject to adjustment if there is a material movement of share price before the signing of the definitive agreements and provide a project facility through a 10% secured loan which may be repaid by issuing up to about 74% of the project holding company.

“With the project situated only 30 km from Windhoek, one of Africa's most accessible mining jurisdictions, we believe the combination of location, infrastructure, financing and world-class engineering expertise provides a compelling opportunity to create a new copper producer for Namibia.

“We look forward to progressing rapidly through the development milestones and updating shareholders as we move towards definitive agreements and the commencement of an accelerated development programme,” says Bird.