Weatherly to acquire Kitumba copper project in Zambia

Weatherly has entered into a binding agreement to purchase 100% of the Kitumba copper project in Zambia from ASX-listed Intrepid Mines, it announced on Tuesday.

The AIM-traded firm said the key terms of the transaction included up-front consideration of AUD 4.75m in cash upon transaction completion, plus deferred consideration of AUD 0.5m upon a decision to mine and a further AUD 0.5m upon achieving commercial production.

It said the transaction remained subject to certain conditions precedent, including Intrepid shareholder approval and any regulatory approvals required in Zambia and Australia.

Weatherly said it obtained a waiver from Orion Mine Finance to use part of the uncommitted $10m loan, announced on 28 July, to fund the transaction to the extent that the company is unable to fund it through operating cash flows.

“The advanced Kitumba copper development project hosts a JORC-compliant measured and indicated resource of 24.9Mt at a copper grade of 2.32% containing 578,000 tonnes of copper,” Weatherly’s board said in its statement.

“Included within this resource is a JORC-compliant reserve of 21.9Mt at a copper grade of 2.20%Cu containing 492,000 tonnes of copper.”

Weatherly said the Kitumba deposit was contained within a granted mining license, valid until 2029, while the wider project area also included four exploration licenses with a combined current mining and exploration tenure area covering more than 900 square kilometres.

To date, an estimated $30m or more had been spent on exploration, drilling, metallurgical testwork and other studies for Kitumba, and the purchase included a fully-established exploration camp on site.

The development of the Kitumba mine was also already environmentally permitted based on the development plan proposed by Intrepid.

This transaction was consistent with the company's stated strategy of pursuing growth through developing and operating profitable medium-scale base metals mines in lower-risk parts of Africa, Weatherly’s board said.

“The Kitumba project is an excellent fit for the project development and operational mining capabilities of Weatherly in the Southern African region, and the company is confident in its ability to rapidly advance the project towards construction and production in the near term.

“Zambia is a well-established mining jurisdiction and is the second-largest producer of copper in Africa,” the board added.

Weatherly said it had solid capabilities, built up while operating in adjacent Namibia for more than 10 years, and members of the board and senior management team had extensive experience working in the Zambian mining sector.

As a result, Weatherly considered it was “well placed” to work constructively and transparently with the Zambian authorities to maximise the benefits of the Kitumba deposit for all stakeholders.

“The company and its subsidiaries are unlikely to generate sufficient surplus cash to meet all loan repayments when due, particularly in the near term,” the board added.

“The company continues to positively engage with Orion on the subject.”