Canada’s Copper Mountain Mining Corp. said it has reached an agreement with South Africa’s Harmony Gold Mining Co. Ltd. to sell its Eva copper project and the associated 2,100 km2 exploration land package in Queensland, Australia for a total cash consideration of $230 million. Under the terms of the transaction, Copper Mountain will receive $170 million in cash on closing of the transaction and up to$60 million in cash, based on contingent payment arrangements. Harmony will pay Copper Mountain 10% of the incremental revenue generated from the Eva copper project and the Australian exploration land package above the revenue assuming a $3.80/lb copper price, which could amount to as much as $30 million. Under another contingent payment arrangement, Copper Mountain could also receive an additional $30 million, based on a $0.03/lb of contained copper for any SAMREC copper resource discovered and declared on a new deposit within the Eva copper project and the Australian exploration land package after the closing of the transaction.
“This transaction demonstrates the value the company has developed in the Eva copper project since our acquisition of Altona Mining Ltd. in 2018,” Copper Mountain’s President and CEO Gil Clausen said. “It also recognizes the exploration upside that exists on the surrounding prospective land package.”
The acquisition of Eva Copper will add at least 1.7 billion lb of copper and 260,000 oz of gold to Harmony’s mineral reserves. “Acquiring the Eva copper project is strategically important to our growth journey,” Harmony CEO Peter Steenkamp said. “It opens a new copper-gold frontier for Harmony within a highly attractive Australian mining area, supplementing our 50% interest in the Tier 1 copper-gold Wafi-Golpu project. The Eva copper project lowers our risk profile, providing additional scale and meaningful diversification that positions Harmony for the future.”
Eva Copper has mineral reserves of 171 million mt grading 0.46% copper and 0.05 g/mt gold, for 1.718 billion lb of copper and 260,000 oz of contained gold. It has inferred resource of 307 million mt at 0.42% copper, 0.04 g/mt gold, for 2.85 billion lb contained copper and 381,000 oz gold. A May 2020 feasibility study, which was updated in December 2021, envisioning a conventional open pit with a conventional crush, grind, and flotation circuit, projected annual production of 100 million lb of copper and 14,000 oz of gold over an expected mine life of 15 years. Development capex is estimated at $597 million.
The closing of the transaction is subject to certain customary conditions, including approval from Australia’s Foreign Investment Review Board and Copper Mountain bondholder approval. The transaction has received approval from the South African Reserve Bank and is not subject to any financing conditions. The transaction is expected to close in the first quarter of 2023.
