Gunson Resources has struck a deal to sell a 40 per cent interest in its Coburn zircon project to Korean steel producer POSCO for $28 million.
The agreement comes nine months after Gunson first announced that it was in negotiations with an east Asian partner, later named as POSCO.
POSCO will make an initial $7 million payment and then contribute $21 million of Gunson’s share of mine development expenditure.
The deal is contingent on Gunson raising its 60 per cent equity share of the mine development costs by the end of 2012.
The most recent estimate of the project’s capital cost was $180 million; that is currently being revised by engineering contractor Sedgman.
After adjusting for POSCO’s contribution and working capital requirements, Gunson is likely to need $45 to $50 million of equity.
Gunson said all material decisions on the project will require unanimous approval by the joint venturers.