REG - Tertiary Minerals - Mukai Project - Agreement for Joint Venture

Tertiary MineralsAnnouncement

07/08/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240807:nRSG4295Za&default-theme=true

RNS Number : 4295Z  Tertiary Minerals PLC  07 August 2024

 

7 August 2024

Tertiary Minerals plc ("Tertiary" or the "Company")

 

Mukai Project - Agreement for Joint Venture

 

The Company is pleased to advise that its newly incorporated Zambian
subsidiary, Copernicus Minerals Limited ("Copernicus"), has signed a binding
letter of agreement ("BLA") with First Quantum Minerals Limited ("First
Quantum") on the Mukai Copper Project in Zambia.

Copernicus is 90% owned by Tertiary Minerals (Zambia) Limited which is 96%
owned by Tertiary Minerals plc.

Key Terms

·    The BLA grants First Quantum an initial exploration due diligence
period of 24 months during which First Quantum is committed to fund a minimum
US$1.5 million of exploration expenditure, including US$0.5 million in Year 1
(Phase 1).

 

·    First Quantum may then enter into an earn-in and joint venture
agreements to earn:

 

Ø an initial 51% joint venture interest in the Mukai Exploration Licence
("the Licence") by demonstrating a Mineral Resource containing at least 80,000
tonnes of contained copper metal within a further 24 months (Phase 2); and

 

Ø a further 29% joint venture interest (total 80%) by completing a Mining
Study and delivering a Notice of Intent to Mine within a third 24-month period
(Phase 3).

 

·    First Quantum must continue sole funding the project until receipt of
regulatory and governmental permits for the commencement of construction of a
mining project. At that point, Copernicus may either participate at a 20%
contributing equity level or dilute down towards a minimum of 10% at which
point the participating interest automatically converts to a 1.5% Net Smelter
Return Royalty (NSR).

 

·    Should First Quantum continue through all phases of the project, they
will make progressive payments to Copernicus totalling up to US$2 million over
the three 24-month phases of the BLA and subsequent agreements.

 

·    The BLA is subject to various conditions precedent including renewal
and transfer of the licences from Mwashia Resources Limited to Copernicus
which is currently in progress (see news release dated 6 June 2024).

 

More detailed information on the BLA is set out below.

 

The Licence lies adjacent to First Quantum's Trident Project which comprises
various mining licences encompassing the producing Sentinel Copper Mine and
the recently developed Enterprise Nickel Mine. The Sentinel processing plant
has a processing capacity of 55 million tonnes of copper ore per year.

The objective of the joint venture is to identify copper (and/or nickel
deposits) that can be rapidly developed as additional feed for the Trident
plants.

 

Patrick Cheetham, Executive Chairman of Tertiary Minerals plc said:

"First Quantum is strongly motivated to find additional ore feed for Sentinel
and, at Mukai, we have defined a priority soil anomaly along strike from
copper mineralisation already drilled by First Quantum on its adjacent Tirosa
Prospect.

"If exploration is successful, we stand to benefit from First Quantum's US$2.1
billion investment in the Trident operations and the joint venture earn-in
terms have been tied to specific mineral resource and mining decision
milestones, rather than specific exploration expenditures. The bar is set
high, consistent with the large size of the Sentinel mining operation and the
agreed terms require First Quantum to define a copper resource with an
in-ground value of over US$700 million at today's copper price, before it
earns any interest in the project.

"Evaluating the potential at Mukai is important for the parties and for Zambia
given its proximity to the infrastructure already established at Trident.
First Quantum is the natural partner for this undertaking given their
unrivalled track record of recognising opportunities, defining resources, and
developing projects quickly and cost effectively."

 

Further Information:

 Tertiary Minerals plc:
 Patrick Cheetham, Executive Chairman  +44 (0) 1625 838 679
 SP Angel Corporate Finance LLP

 Nominated Adviser and Broker
 Richard Morrison                      +44 (0) 203 470 0470
 Caroline Rowe
 Peterhouse Capital Limited

 Joint Broker
 Lucy Williams                         + 44 (0) 207 469 0930
 Duncan Vasey

 

Market Abuse Regulation

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.

 

Detailed Information

Background

The Mukai Copper Project is comprised of Exploration Licence 27066-HQ-LEL (the
"Licence"). The Licence is held by the Company's local partner, Mwashia
Resources Limited ("Mwashia"), and is currently being renewed and transferred
to Copernicus Minerals Limited ("Copernicus"). Further details are given in
the Company's news release of 6 June 2024.

Tertiary has had a technical cooperation and data sharing cooperation
agreement with First Quantum since 12 September 2022. This has helped guide
the Company's exploration at Mukai and has resulted in the identification of a
substantial soil anomaly on the Licence as described in the Company's news
release of 12 September 2023.

This soil anomaly occurs along strike from copper mineralisation that has been
identified in past drill programmes at First Quantum's Tirosa Prospect, on
First Quantum's adjoining Trident Project, which encompasses the Sentinel
Copper and Enterprise Nickel mines.

The Sentinel Mine was developed from 2016 with a total investment of over
US$2.1 billion and is expected to produce around 235,000 tonnes of copper
metal this year. The Enterprise Nickel mine is newly opened and expects to
produce around 20,000 tonnes of nickel in 2024. Both deposits are
sediment-hosted and occur in sedimentary basins formed on and around the
Kabompo Dome.

A similarly located basin hosts the Tirosa Prospect and continues into the
Licence.

 

Key Terms of the Binding Letter Agreement

1.   The BLA establishes an initial exploration due diligence period of 24
months (Phase 1) during which First Quantum is committed to fund a minimum of
US$1.5million in this period including US$500,000 in the first year.

 

2.   If Phase 1 exploration is successful, First Quantum may enter into an
earn-in agreement with Copernicus and earn an initial 51% interest in the
Licence by demonstrating a Mineral Resource(1) containing at least 80,000
tonnes of contained copper metal (current in-ground value over US$700 million)
within 24 months of the Transfer Date defined below (Phase 2).

 

3.   On First Quantum electing to proceed to Phase 2, Copernicus will set up
a 100% owned special purpose vehicle ("SPV") and the Licence will be
transferred to that SPV. The date the Licence is transferred to the SPV will
be the "Transfer Date".  Any equity to be acquired by First Quantum in the
Licence will be acquired via a shareholding in the SPV.

 

4.   If a Mineral Resource of the minimum size is defined during Phase 2,
then First Quantum and Copernicus will enter into a Joint
Venture/Shareholder's Agreement ("JVA") whereby First Quantum can earn an
additional 29% interest (total 80%) in the SPV by completing a Mining Study
and delivering a Notice of Intent to Mine within 24 months of the signing of
the JVA (Phase 3).

 

5.   First Quantum may elect to extend Phase 3 by 24 months on making the
payment set out below.

 

6.   First Quantum must continue sole funding the project up to receipt of
regulatory and governmental permits for commencement of construction of a
mining project. At that point Copernicus may either participate at a 20%
contributing equity level or dilute through to a 10% level at which point the
participating interest automatically converts to a 1.5% Net Smelter Return
Royalty (NSR).

 

7.   The BLA is subject to the following conditions precedent:

·    the renewal and completion of transfer of the Licence to Copernicus.

·    receipt of any government approvals that may be required.

·    First Quantum completing within 30 days of signing the BLA a
satisfactory review of the Company registration documents and good standing of
all signatories to the BLA.

 

8.   First Quantum must make the following payments to Copernicus:

·    US$20,000 within 30 days of signing the BLA.

·    US$30,000 on satisfaction of the conditions precedent.

·    US$150,000 within 30 days of the Transfer Date .

·    US$300,000 within 30 days of making the election to proceed to Phase
3.

·    US$500,000 within 30 days of delivery of a Notice of Intent to Mine.

·    US$1,000,000 if requesting to extend Phase 3 beyond 24 months.

 

9.   If First Quantum does not elect at the end of Phase 2 to continue with
Phase 3, or fails to deliver a Notice of Intent to Mine by the end of Phase 3,
then 100% ownership of the Licence will revert back to Copernicus.

 

10. A technical committee of two representatives from each of First Quantum
and Copernicus will oversee operations during Phases 1-3 and technical
planning will be a collaborative effort. First Quantum will, however, have the
final approval on all budgets and technical programs and expenditures whilst
sole-funding.

 

About First Quantum Minerals

First Quantum is a global copper company. First Quantum produces copper in the
form of concentrate, cathode and anode, and has inventories of nickel, gold
and cobalt. It operates long-life mines in several countries and employs
approximately 20,000 people world-wide. It is the largest producer of copper
in Zambia with total production of 330,863 tonnes of copper in 2023.

 

Notes:

1.   The Letter Agreement specifies that the Mineral Resource must be
compliant with the definition contained in either the Canadian Institute of
Mining, Metallurgy and Petroleum (CIM) Definition Standards for Mineral
Resources & Mineral Reserves adopted by CIM Council on May 19, 2014, or by
another current Committee for Mineral Reserves International Reporting
Standards (CRIRSCO) template compliant code. Notably this requires that the
Mineral Resource must have the prospect for eventual economic extraction.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  STRPFMATMTAMBBI