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Ivanhoe Mines (TSXV:IVN) reported that it has completed its previously announced deal with China’s Zijin Mining for a US$412 million investment in the Kamoa copper project.
Ivanhoe Mines (TSXV:IVN) reported that it has completed its previously announced deal with China’s Zijin Mining for a US$412 million investment in the Kamoa copper project.
As quoted in the press release:
Zijin, through a subsidiary company, has acquired a 49.5% interest in Kamoa Holding Limited for a total of US$412 million in a series of payments. These funds will be paid into Ivanhoe’s corporate treasury and will be utilized by the company for general corporate purposes.
Ivanhoe received an initial US$206 million from Zijin today; the remaining US$206 million will be received in five equal installments, payable every 3.5 months from today. The Zijin investment, combined with Ivanhoe’s cash, cash equivalents and short-term deposits, will make a total of approximately US$530 million (C$716 million), exclusive of current liabilities, available to advance Ivanhoe’s tier one projects in South Africa and the Democratic Republic of Congo.
Of this total, approximately US$61 million (C$82 million) is reserved for use at Ivanhoe’s Platreef Project in South Africa.
The total cash, cash equivalents, short-term deposits and receivables from Zijin, exclusive of current liabilities, represent approximately C$0.92 per issued and outstanding common share of Ivanhoe Mines.
Ivanhoe executive chairman, Robert Friedland, said:
It is satisfying to complete this transaction with Zijin amid these interesting market conditions. Our partnership with Zijin will allow us to develop Kamoa into a major, tier one copper mine at a time when conditions in commodity markets are compelling virtually all others to run in the opposite direction. When the consistent, downward trend in head grades at the world’s major copper mines is combined with the current drastic curtailment in exploration and development spending, as well as cutbacks in sustaining capital, we are highly confident we will see a significant copper-supply deficit and a sharp rise in copper prices as this decade draws to a close – at approximately the same time as we expect Kamoa to begin decades of commercial production. The old adage again is proving to be very true: The best cure for low prices is low prices.