Camrova Resources has signed a binding letter of intent (LoI) to provide funding to Gubier Marambio H SpA (GMH) and Metalex Ltda to restart an existing copper processing plant in Chile.
This plant consists of equipment and mining rights owned by GMH and Metalex located in Copiapó, Chile, at the Virginia Project that has operated only occasionally.
The Virginia Project is a heap leach operation with access to a supply of purchased ore mined locally.
Camrova interim CEO Tom Ogryzlo said: "We are excited to have agreed a framework to work together with our new partners in Chile for the development of the Virginia Project as a small-scale, copper producer.
"The Virginia Project represents an ideal first-step investment opportunity for Camrova: manageable risk and capital requirements, consistent with our technical expertise, and having the potential for near-term generation of cash-flow or value creation.”
GMH and Metalex intend to bring the plant back into production of copper sulphate and cathode copper with investment in equipment upgrades.
Copper sulphate has several applications in agriculture and the copper content in copper sulphate attracts a premium over the market price of cathode copper.
Under the LoI, Camrova will make an initial investment of $304,000 structured as a loan, with the option to make further advances to fund the project for a total investment of up to $1.2m, which may be converted for a 40% equity interest in the Virginia Project.
As incentive for Camrova to participate in an investment in the Virginia Project, Camrova will receive a fee equal to 5% of all revenues from product sales besides certain rights of repayment or profit sharing.
The companies expect the development of the project to be in stages. Stage 1 will have a monthly production and sale of 12.5t of copper in copper sulphate. Stage 2 will feature monthly production and sale of 12.5t of copper in copper sulphate and 12.5t of copper cathode, while stage 3 will have a monthly production rate of 25t of copper in copper sulphate and 25t of copper cathode.