Zijin Mining Group, through its subsidiary Gold Mountains International Mining Co. Ltd., will buy a 49.5% interest in Kamoa Holding Ltd., an Ivanhoe Mines Ltd. subsidiary that owns 95% of the Kamoa project, for $412 million.
Zijin also has committed to use its best efforts to arrange or procure project financing for 65% of the capital required to develop the first phase of the Kamoa project, as set out in the feasibility study, without any recourse, and on terms acceptable to Ivanhoe. Zijin will provide any and all required completion guarantees relating to the securing of project financing for the Kamoa project.
“This agreement with Zijin, one of the world's most accomplished miners, is further confirmation of Kamoa’s distinction as one of the most significant, undeveloped mineral discoveries of our age and charts a course for the realization of significant benefits for all of Ivanhoe’s and Zijin’s stakeholders as well as the Congolese people,” said Robert Friedland, executive chairman, Ivanhoe Mines. “Together with the Congolese government and Zijin, we aim to meet the expectations of the Congolese people and our stakeholders in Katanga as we proceed to build a world-class, new copper mine.”
Upon closing of the transaction, each shareholder is required to fund Kamoa Holding in an amount equivalent to its proportionate shareholding interest.
In addition, since 65% of the pre-production capital required to develop the first phase of the Kamoa project is to be funded through project financing, the balance of 35% of the required capital will be funded pro rata by shareholders. Therefore, Zijin and Ivanhoe each effectively will be required to fund 17.5% of the remaining first phase development costs.