Altona Mining has sealed the deal with Sichuan Railway Investment Group (SRIG) to create a joint venture to build a new copper-gold mine in north-west Queensland
The company announced today that it had concluded negotiations on binding agreements with SRIG, which will contribute $US213.53 million ($AU295 million) towards the development of Altona’s Cloncurry Project (formerly the Roseby Copper Project) , while Altona puts up $US25 million ($AU34.5 million) in cash.
The new Roseby Copper joint venture intends to develop a 7 million tonne per annum open-pit mine and flotation plant capable of producing 39,000 tonnes per annum copper and 17,000 ounces gold over an initial mine life of 11 years.
Previous estimates have placed the capital costs of brining the mine online at $294 million, however Altona says it expects the ultimate capital costs will be materially lower given the current depressed market for mining construction.
The agreement between Altona and SRIG is still subject to conditions, including Chinese regulatory approvals, with closure targeted for October 31.
“We are delighted to announce the finalisation of binding agreements for this major partnership with SRIG on the Cloncurry Project,” Altona managing director Dr Alistair Cowden said.
“This financing structure delivers higher and more immediate returns to Altona shareholders compared to conventional debt/equity mining project financing structure.
“We have chosen to dilute at the project level, not at the company level. Altona avoids large dilutive equity raisings, debt, debt service taking precedence over shareholder dividends, mandatory hedging which caps the copper price upside and bank covenants limiting the ability to grow.
“On closing of the transaction, the project will be fully funded to production. The joint venture company will have approximately $329 million in cash plus the Cloncurry project.”
The project, 95km north-east of Mount Isa, is expected to involve about 300 construction jobs and sustain about 280 new direct jobs in operation.
Mr Cowden has previously indicated that Altona preferred to go local where possible for workforce and supply needs, but only if the skill it sought was there and the price was competitive.