Altona Mining has signed a joint venture agreement with a Chinese construction group for its Cloncurry copper-gold project in Queensland, with the partner to contribute $US214.5 million ($A278.1m) towards the project.
Under the terms of the deal, Sichuan Railway Investment Group will contribute the cash and will own a 60 per cent stake in Cloncurry, with Altona to retain a 40 per cent interest and contribute $US38 million in cash.
“The transaction values to Cloncurry project on a pre-cash contribution basis of $US105 million,” Altona said in a statement.
Altona said it will be able to meet its obligations immediately, using existing cash reserves.
The joint venture will also seek to develop a 7 million tonne per annum open-pit mine at Little Eva, situated within the Cloncurry project, along with a flotation plant capable of producing 39,000 tonnes of copper per annum, and 17,000 ounces of gold over an initial mine life of 11 years.
“Altona’s 40 per cent equity share of annual production from the Cloncurry project would be substantial at about 15,000-16,000t of copper and 7,000oz of gold,” Altona said.
The Cloncurry project offers 1.65mt of contained copper and 400,000oz of gold, and is close to infrastructure.
Altona managing director Alistair Cowden said the contribution to be made by Sichuan was based on an agreed value for the project of $US105 million.
“On completion of the transaction, the project will be fully funded to production without recourse to equity or debt markets,” Mr Cowden said.
“The joint venture will have $US252 million in cash plus the Cloncurry project, and once the project is in production it will sustain about 280 direct new jobs.
“This announcement comes 11 months after the announcement of the sale of our Finnish assets and only three months after the resulting dividend and return of capital,” he said.
Altona will be the initial manager when the joint venture is first established.
The two parties are targeting executiion of formal agreements by November 30, and a close of transaction before February next year.
Hartleys acted as corporate advisor to Altona.
Altona sold its Finnish operations and most of its exploration assets to Swedish miner Boliden Mineral for about $US95 million in October last year.
Altona shares were 11.5 per cent higher to 14.5 cents each at 10am.
