Coppermoly (ASX: COY) holds a 28 percent interest in some highly prospective tenements in Papua New Guinea, with global heavy weight Barrick Gold Corporation holding the 72 percent balance – through a subsidiary and farm-in partner Barrick (PNG Exploration) Limited.
Barrick has advised Coppermoly that it intends to commence a process to engage with market participants for the purpose of divesting its 72 percent interest in the tenements, which are known as EL1043 (Nakru), EL 1445 (Talelumas) and EL 1077 (Simuku).
Peter Swiridiuk, managing director of Coppermoly, said that in light of the significant copper intersections at the Nakru project over the past few years, “we believe these projects have considerable value and potential to progress through to feasibility with additional drilling.”
Barrick has conducted a considerable amount of exploration on the tenements, and earned its interest through a farm-in by spending $20 million.
Swiridiuk added, “Although these projects may not presently represent the size for development by the world’s largest gold producer, the significant grades of copper, gold and zinc and current commodity prices put them in good standing for further development.”
Breakdown of the terms under the Letter Agreement
1. Coppermoly retains a 28 percent interest in the Tenements;
2. Barrick and Coppermoly have agreed to enter into good faith negotiations to prepare a formal joint venture agreement on terms which are consistent with the terms of the Letter Agreement;
3. Barrick, as the initial manager for the joint venture, is responsible for all work programmes, including paying all rates, rents, levies and fees, as well as meeting all expenditure and work commitments stipulated by the Tenement authorities;
4. Payment of Coppermoly’s 28 percent share of any costs incurred by Barrick up to the completion of a feasibility study will be delayed until the commencement of production on the Tenements; and
5. Coppermoly has a right of first refusal to acquire Barrick’s interest on terms no less favourable than those proposed by a third party purchaser, which Coppermoly may exercise within 60 days of being notified by Barrick of the terms of the proposed offer by a third party.
Coppermoly said that it will consider its options once Barrick has received any proposals following this process, and will update the market once it has further information regarding the proposal.