Base metals: Minotaur wins OZ Minerals’ support to fund it through to production
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Minotaur Exploration (ASX:MEP) has got OZ Minerals (ASX:OZL) on its side with a new binding deal that will see the much larger copper producer “loan carry” the junior through to production.
OZ Minerals has agreed to fund Minotaur’s share of the development of the Jericho copper project, part of the pair’s Eloise joint venture project.
The $3 billion miner has already earnt a 70 per cent stake in the Eloise project, but with this latest deal can increase its share of the Jericho project to 80 per cent.
The loan carry arrangement covers all drilling, scoping, feasibility studies, mine development and construction funding, which Minotaur said is currently an indeterminate amount but potentially would amount to “many millions of dollars”.
“Minotaur’s board considers the loan carry arrangement over the Jericho project is, at this early pre-resource stage, a highly attractive route for the company as Minotaur is relieved of all expenditure for its share of Jericho from now until mine cash flow eventuates,” managing director Andrew Woskett told investors today.
“Moreover, Minotaur avoids highly dilutive equity funding to finance its share of the project.”
The loan is repayable from future cash flows from the Jericho mine.
The pair expect the Jericho deal to be cemented in the next two months.
While this particular situation won’t affect near-term supply, the industry needs to start finding new mines now to deal with the shortfall expected in the next one to two decades.
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