Metals Acquisition Limited (MAC) has purchased a strategic stake in Polymetals Resources, the owner of the Endeavor silver-zinc-lead mine in the Cobar Basin region of New South Wales.
MAC will first invest $2.5 million at $0.35 per share for an initial 4.31 per cent interest in Polymetals.
The company will then invest an additional $2.5 million at $0.35 per share if Polymetals secures funding to restart the Endeavor mine and processing plant.
The investment will also depend on MAC and Polymetals entering into a tolling agreement to treat zinc ore delivered and a water offtake agreement where Polymetals will allow MAC to draw 150ML of water per annum from the Endeavor mine pipeline for a 4.5-year term, which MAC will have the option to extend.
MAC said having the option to treat Endeavor’s potential high-grade zinc mineralisation near its CSA copper mine could create significant shareholder value.
“We believe that this kind of transaction is an example of how cooperation in the Cobar Basin has the potential to extract the best value in the Basin,” MAC chief executive officer Mick McMullen said.
“As recently announced, the CSA copper mine appears to host high-grade zinc mineralisation near surface and adjacent to existing development. Subject to exploration success, modifying factors and some permitting, we think that having the option to treat this material at Endeavor can potentially create significant value for our shareholders.
“This is a logical way of securing a processing option for any zinc ore we might mine without distracting our operations from the core business of mining and recovering copper.”
MAC will have the right to appoint one director to the Polymetals board while MAC holds more than seven per cent of Polymetals’ issued shares.
Polymetals executive chairman Dave Sproule welcomed MAC’s investment.
“Polymetals has operated in the Cobar Basin for many years and is confident the alliance with MAC will generate significant benefit for all stakeholders,” Sproule said.
“Both companies are managed by long-term solution focused operators which will unlock value from existing synergies and identify other opportunities as the relationship grows.
“Bringing the Endeavor silver-zinc mine back to production will be a great outcome for NSW and the Cobar community, creating over 200 direct jobs and injecting around $50m a year into the local community for at least another 10 years.”
Subscribe to Australian Mining and receive the latest news on product announcements, industry developments, commodities and more.
