Rio signs $51 million earn-in on Zambia copper deposits
Rio Tinto has signed an earn-in and joint venture agreement with Vancouver-based Junior Midnight Sun Mining (TSXV: MMA), under which the Anglo-Australian miner will acquire up to 75% of the shares in its Solwezi licenses can.
The Solwezi licenses include two individual exploration licenses totaling 506 square kilometers in the northwestern province of Zambia alongside the Kansanshi mine of First Quantum Minerals – Africa’s largest copper mining complex and one of the largest copper producers in the world.
Other notable copper companies in the region include the Sentinel Mine, which is also owned by First Quantum, and the Barrick Gold Lumwana Mine
As part of the agreement, Rio Tinto will make an initial payment of $700,000 to Midnight Sun, as well as fund an initial work program on the Solwezi licenses by spending $3 million, of which $2 million is a firm commitment, within the next two field seasons.
On completion, a further $300,000 will be paid to Midnight Sun before Rio proceeds with the additional expenditures.
When the initial work program is complete, Rio would earn 51% ownership of the Solwezi licenses by incurring a further $16 million in work expenditures within four years and making a total of $1 million in additional scheduled cash payments to Midnight Sun.
The company can then earn an additional 14% ownership of the licenses by incurring another $14 million in work expenditures or completing a feasibility study within three years, and making an additional $1 million in cash payments to Midnight Sun.
Afterwards, Rio Tinto can earn a further 10% ownership by spending an additional $15 million on work within two years.
In total, Rio Tinto would spend $51 million to acquire 75% ownership of the Zambian copper deposits.
Shares of Midnight Sun opened 20.2% higher on Monday with news of the Rio Tinto agreement. The junior miner has a market capitalization of C$18.3 million.
source: mining.com
