OZ Minerals Limited and IMX Resources Limited have signed a binding Heads of Agreement with the intention of forming a Joint Venture Agreement to explore for and develop copper-gold projects on IMX’s Mt Woods tenements in South Australia. These tenements are largely contiguous with OZ Minerals tenements, which include its Prominent Hill mine. IMX will retain the rights to any predominantly iron ore discoveries.
OZ Minerals considers the area surrounding the Prominent Hill copper-gold mine to be prospective for the discovery of similar types of deposits and as such, the tenements surrounding Prominent Hill are a high exploration priority.
Commenting on the deal, IMX Managing Director, Duncan McBain said “IMX sees the proposed copper-gold
Joint Venture as a win-win situation that will result in a greatly increased level of exploration expenditure for copper-gold targets during the next five years. IMX intends to be a very active joint venture partner.With IMX retaining the rights where iron ore is the dominant economic mineral, it means we are able to continue to expand our iron ore strategy in the Cairn Hill / Mt Woods area”, he said
On announcing the proposed Joint Venture Agreement, OZ Minerals Managing Director and CEO Terry Burgess said, “The Joint Venture will allow exploration on the IMX tenements to be expedited, for the benefit of both OZ Minerals and IMX shareholders. The proximity of the tenements to the existing Prominent Hill mine infrastructure greatly enhances the chance of an economic discovery.”
In addition to the exploration agreement, IMX has agreed to place 26,150,000 fully paid ordinary shares (representing 15% of its issued capital) to OZ Minerals at 38.5 cents per share, which is a 25% premium to the 30-day VWAP prior to this announcement. IMX will receive $10.068m from the placement. Following the placement OZ Minerals will hold 13.0% of IMX.
The two parties have entered a binding Heads of Agreement with the intention of rapidly progressing this to a formal Joint Venture Agreement.
On signing the Joint Venture Agreement, OZ Minerals will immediately earn a 51% interest in the proposed copper-gold Joint Venture and will retain this provided it spends a minimum of $4 million a year over the next five years for a total of $20m. If OZ Minerals fails to spend this amount it forfeits the entire 51%.
After this expenditure, both parties have the option to contribute pro rata to any further expenditure on exploration. Should IMX not contribute, OZ Minerals can earn up to a maximum of 75% at this phase by sole funding a further $20m, with IMX progressively diluting. IMX cannot be diluted below 25% and would at this point be free carried through the conclusion of a bankable feasibility study (BFS) on any discovery.
Categories: PROMINENT HILL News