TIDMTHR
RNS Number : 7118M
Thor Mining PLC
01 August 2017
1 August 2017
THOR MINING PLC
AGREEMENT TO CO-INVEST IN SOUTH AUSTRALIAN COPPER PROJECT
EARNING MAJORITY INTEREST NEW COPPER FOCUSED COMPANY
The Board of Thor Mining Plc ("Thor" or the "Company") (AIM,
ASX: THR) is pleased to announce it has agreed to acquire an
interest in the historically mined Kapunda copper deposit in South
Australia ("Kapunda").
Thor will invest in a newly incorporated private Australian
company, Environmental Copper Recovery SA Pty Ltd. ("ECR"),
initially via convertible loan notes of up to A$1.8 million, which
will be used to fund field test work and feasibility activities at
Kapunda over the next 3 years. In turn ECR has entered into an
agreement to earn, in two stages, up to 75% of the rights over
metals which may be recovered via in-situ recovery ("ISR")
contained in the Kapunda deposit from Australian listed company,
Terramin Australia Limited ("Terramin" ASX: "TZN").
Agreement Details:
- Binding term sheet signed to provide funding through
convertible notes in ECR, of up to A$1.8 million, which will be
used by ECR to fund field test work and feasibility study
activities at Kapunda;
- Conversion of loan notes in ECR is at the sole discretion of
Thor, and will result in Thor holding up to a 60% equity interest
in ECR, depending on the timing of conversion and value of the
convertible loan notes that Thor holds at the time;
- Upon the initial investment in loan notes by Thor, agreed at
A$200,000, Thor will be invited to nominate two of the four
directors of ECR and shall nominate the chairman;
- ECR to earn an initial 50% of the rights over that portion of
the Kapunda deposit minerals which can be extracted via in-situ
recovery through the expenditure of A$2.0 million on field test
work, metallurgical studies, and other environmental and
feasibility processes;
- ECR to hold the right to earn a further 25% of that part of
the Kapunda copper deposit which can be extracted via in-situ
recovery through the expenditure of a further A$4.0 million. Should
ECR decide to earn-in to this additional 25%, the shareholders of
ECR will contribute the A$4.0m on a pro-rata basis or their
holdings in ECR will be diluted.
Mr Mick Billing, Executive Chairman, commented:
Mick Billing, Chairman of Thor Mining plc: "We are delighted to
team up with the professional people of Environmental Copper
Recovery in, what we expect, is to be the first of several low-cost
copper opportunities in Australia.
"Kapunda is not an exploration project where we hope to find
mineralisation. The presence of copper is well documented with
significant prior production, and substantial historical drilling.
The opportunity at Kapunda is to test, at modest cost, the
potential for insitu recovery to extract the copper mineralisation.
While the characteristics of the deposit, determined from reviewing
historical drilling results, appear suitable for this style of
extraction, hydrogeological pump testing is required for
validation.
"We look forward to updating the market shortly with a resource
estimate and details of first steps in assessing for commercial
development."
Kapunda Copper Deposit
On the edge of the town of Kapunda (90 minutes north of
Adelaide) is the historic Kapunda Copper mine, the site of the
birthplace of the Australian commercial copper mining history.
Copper was mined from Kapunda for more than 30 years, until 1877
with tributors subsequently working it through to 1912.
Link to Figure 1. Kapunda Location Map
http://www.rns-pdf.londonstockexchange.com/rns/7118M_-2017-8-1.pdf
The Kapunda copper deposit has been comprehensively drill tested
over many years (Ref Figures 2 &3), however a JORC compliant
resource estimate has not been published. The protocol for
estimation, and reporting, of resources with potential for
exploitation via insitu-recovery has a number of additional steps
compared with conventional mining and processing, and this
procedure is currently in progress, with an outcome expected in the
coming weeks.
Link to Figure 2. Old Kapunda Mine Area - "Copper Range Limited
Progress Report 14 December 2007"
http://www.rns-pdf.londonstockexchange.com/rns/7118M_-2017-8-1.pdf
Link to Figure 3. Old Kapunda Mine Area cross section 8300N
"Copper Range Limited Progress Report 14 December 2007"
http://www.rns-pdf.londonstockexchange.com/rns/7118M_-2017-8-1.pdf
In addition to the substantial body of evidence from copper
assays, while gold assays were not routinely conducted, subsequent
work has since suggested gold mineralisation in parts of the
deposit, although the data supporting this is limited.
About Environmental Copper Recovery SA Pty Ltd ("ECR")
ECR is a newly formed Australian private limited company
established by METGH Pty Ltd, a 100% owned subsidiary of Midas
Environmental Technologies Pty Ltd (MET), and Mr Tennyson Wickham
of corporate advisory group Fortis Ago, for the purpose of
acquiring and developing the Kapunda resource (and potentially
other projects of interest in the future). MET was founded in by a
team of senior mining professionals with over 90 years' experience
in mine development and operations to pursue project development
opportunities for the recovery of gold and copper. The team's
capabilities include an extensive background in South Australian
uranium ISR production.
Over a period of 12 months, METGH has undertaken a detailed
technical review and due diligence regarding the potential
application of ISR at Kapunda as a low impact, environmentally
friendly method of metal extraction. The group has also established
relationships with several research organisations including the
Australian government owned Commonwealth Scientific and Industrial
Research Organisation ("CSIRO") who are developing new suites of
environmentally benign "lixiviants" to extract and recover metals
in low impact ISR operations.
ECR are proposing to test extraction via "in-situ recovery"
(ISR) of the copper, and potentially also gold, followed by either
SX/EW (solvent extraction / electrowin) or IX/EW (ion exchange /
electrowin). If field recovery tests are successful, then a
pre-feasibility study to project to assess the economic viability
of producing copper (and possibly gold) at low capital and
operating cost will be commissioned. Primary ore below the near
surface oxide and chalcocite horizons is unlikely to be a mineable
proposition until chemical recovery of those minerals becomes
feasible and economic.
Copper In-situ Recovery
ISR is a common extraction method in uranium production (more
than 50% of current world uranium production is via ISR), and has
also been successful, where conditions are suitable, in copper
production, in the USA and Russia. ISR production of copper at the
San Manuel mine in the USA lasted 15 years and amounted to over 250
million pounds of copper during its lifetime*.
*Data sourced from Mining.com article - In-situ copper leaching
is a proven technology
ISR uses solutions (lixiviants) pumped through boreholes into
the mineralized body, to dissolve (leach) the metals followed by
extraction from nearby boreholes (ref Figure. 4). It requires that
the minerals be amenable to chemical recovery (in this instance
near surface copper oxides and chalcocite), and that the
mineralised body be permeable and located and managed such that the
solutions does not contaminate groundwater away from the deposit.
The process is managed such that the solutions do not contaminate
groundwater away from the deposit and that groundwater is
remediated after the process in compliance with regulatory
requirements.
Link to Figure 4. Schematic of Insitu Recovery process
http://www.rns-pdf.londonstockexchange.com/rns/7118M_-2017-8-1.pdf
It is a low cost and low environmental impact process, provided
the ground conditions allow the flow of leaching liquor through the
deposit.
Further details of the transactions
Acquisition of up to 60% of ECR
A binding term sheet has been signed by the Company to provide
funding through convertible loan notes issued by ECR which can be
converted to equity in ECR at the election and timing chosen by
Thor. Thor has the right to invest up to A$1.8 million over 3 years
(before any available Australian government research and
development rebates) in ECR zero-coupon convertible notes,
commencing with an initial A$200,000 investment within the next 10
days. Following the investment in the initial A$200,000 of
convertible loan notes, Thor will be able to convert the loan notes
at its sole discretion at any time, into an equity interest in ECR.
Thor has an obligation to spend a minimum of A$300,000 during each
12 month period following the commencement of this agreement.
Upon conversion, the value of Thor's equity interest in ECR will
vary depending on Thor's total investment in ECR convertible notes
at that time and the stage of the project fieldwork at Kapunda, up
to a 60% interest.
MET is assumed to have an initial equity interest in ECR of
A$1.2m (rising in stages to up to A$ 1.6m on the occurrence of
certain events including a successful field recovery trial and an
internal feasibility study demonstrating that ECR's share of the
ISR recoverable portion of the Kapunda project has a base case NPV
of greater than A$40 million). Any conversion of loan notes by
Thor, which can take place in stages, would give it an equity
percentage based on MET's equity interest at the time and the value
of Thor's loan notes converted. For example, Thor's initial
A$200,000 loan notes, if converted, would give it a 14.3% interest
and A$1.8m would give it 60%. Should ECR's equity interest increase
to $1.6m, Thor has the option to provide an additional A$600,000 to
maintain its 60% interest.
Upon Thor investing in the first A$200,000 of convertible loan
notes, Thor will be invited to nominate two of the four directors
of ECR, and shall nominate the chairman.
As further funding may be required to meet ECR's expenditure
commitments (see below), ECR may seek to raise capital from Thor
and METGH on a pro-rata basis to their equity interest in ECR. If
either shareholder is unable to provide sufficient funding at that
time, their respective equity interest in ECR shall be diluted.
Thor and ECR will now proceed to formalise these arrangements by
entering into shareholder and convertible loan note agreements
within the next 375 days and the Company will release further
updates in this respect in due course.
Acquisition of up to 75% of the ISR recoverable portion of the
Kapunda deposit by ECR
A separate binding term sheet has been signed by ECR and
Terramin, which governs the terms on which ECR will acquire an
interest in mineral rights and claims (including the associated
mining information) over the ISR recoverable portion of the Kapunda
deposit via a two-stage earn-in agreement.
ECR has the right to earn a 50% interest in the ISR recoverable
portion of the Kapunda deposit (the "Initial Kapunda Interest") by
funding completion of proof of concept test work, field leach
trials and a pre-feasibility study ("PFS") to demonstrate the
ability to feasibly extract copper and/or other metals from
Kapunda.
ECR will earn 50% interest of the mineral rights and claims
(including the associated mining information) over the ISR
recoverable portion of the Kapunda deposit upon the completion of
either:
i. a successful field recovery trial as evidenced by a positive PFS outcome; or
ii. the total agreed project expenditure reaching $2m.
Thor's investment in ECR convertible loan notes will be used to
fund the initial work at Kapunda, and ECR will seek further
investment in due course.
Should ECR earn the Initial Kapunda Interest, it will have the
additional right to earn a further 25% interest in the mineral
rights and claims over the ISR recoverable portion of Kapunda by
spending an additional A$4.0 million on project expenditure (the
"Additional Kapunda Interest").
Should ECR earn the Additional Kapunda Interest, Terramin, in
addition to a residual 25% contributing interest, will hold a 1.5%
net smelter royalty in respect of all metal extracted from the
Kapunda project area.
Thereafter, both parties will have the option to continue to
contribute to applicable project activities or accept dilution to
their interests in the Kapunda project.
The minimum required annual expenditure on the project is A$0.3
million pa, with no fixed period within which ECR must earn the
Initial Kapunda Interest. However ECR can withdraw at any time if
it deems that the project is not viable.
ECR and Terramin will proceed to agree a joint venture agreement
within 90 days and the Company will make further announcements in
this respect in due course.
Enquiries:
Mick Billing +61 (8) 7324 Thor Mining Executive
1935 PLC Chairman
Ray Ridge +61 (8) 7324 Thor Mining CFO/Company
1935 PLC Secretary
Colin Aaronson/ +44 (0) 207 383 Grant Thornton Nominated
Daniel Bush/ 5100 UK LLP Adviser
Richard Tonthat
Elliot Hance +44 (0) 207382 Beaufort Securities Joint Broker
8300 Limited
Nick Emerson +44 (0) 1483 SI Capital Ltd Joint Broker
/ Andy Thacker 413 500
Tim Blythe/ +44 (0) 207 138 Blytheweigh Financial
Camilla Horsfall 3222 PR
Updates on the Company's activities are regularly posted on
Thor's website www.thormining.com, which includes a facility to
register to receive these updates by email, and on the Company's
twitter page @ThorMining.
Competent Person's Report
The information in this report is based on information compiled
by Mr Leon Faulkner, who holds a BSc in geology and is a member of
the Australian Institute of Geoscientists. Mr Faulkner is also a
director of Environmental Copper Recovery SA Pty Ltd. He has
sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person
as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'. Leon Faulkner consents to the inclusion in the report of
the matters based on his information in the form and context in
which it appears.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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