Jubilee Platinum has signed a binding and exclusive term sheet with Resilience Mining Australia (RMA) to explore and develop Leigh Copper Mine (LCCM) in South Australia, as well as other associated tenements owned by Leigh Copper Mine Proprietary.
The deal is subject to conditions such as satisfactory due diligence and entering a transactional agreement.
Jubilee chief executive Leon Coetzer said: “The execution of this term sheet demonstrates Jubilee's ability to apply its processing success and expertise in the recovery of platinum and chrome to associated base metals such as copper.
“The expertise that Jubilee holds in the processing of near-surface materials and tailings is easily transferred to minerals that fall within the PGM and base metals grouping.”
Under the proposed commercial transaction, Jubilee will have the right to purchase up to 100% of the issued shares in the Leigh Copper Mine Proprietary Ltd by paying A$4.5m ($3.38m)in cash for the acquisition of shares, A$2.5m ($1.88m) in secured loans and A$1m ($0.75m) in subscription payments.
Upon Jubilee Platinum opting to proceed after exclusive due diligence, estimated to conclude before the end of April, and execution of the proposed commercial transaction, Leigh Copper Mine Proprietary Limited will be offered a three-year-term interest bearing a securitised loan of A$500,000 towards speeding-up production timelines.
First commercial copper production is expected within four months of project commercial transaction. On entering the proposed transaction, Jubilee will purchase 20% of issued shares of the project company for A$500,000.
Following the 20% acquisition, Jubilee will subscribe for a further 20% shareholding in the project company for a subscription price of A$1m towards achieving commercial production, which will give Jubilee a 40% shareholding in the project.
After completion of Phase 1, Jubilee will secure the option to acquire a further 11% of the issued shares in Leigh Copper Mine Proprietary Limited for a purchase price of A$500,000. This will take Jubilee's total shareholding to 51% in the project company.
Upon Jubilee choosing to start with Phase 2 and objectives, the company will provide a further three-year-term interest bearing securitised loan to the project company of A$2m the companies consider further capital is required for the project.
After having purchased a 51% shareholding in the project company and electing to proceed with Phase 2 objectives, Jubilee will have the option of acquiring an additional 29% of issued shares in the project company for A$500,000, taking its shareholding in the project company to 80%.
With the project achieving the target 3,000t Cu sold in Phase 3, Jubilee will make a deferred consideration payment to RMA of A$1m in cash.
Upon the project achieving the target of 9,000t Cu sold, Jubilee will make a further deferred cash consideration payment to RMA of A$1m.
Jubilee will offer RMA an option to convert its remaining shareholding in the project company at Phase 4 in exchange for Jubilee shares valued at A$1m, which will be valid for five years from execution of the term sheet.