Anglo American will be entitled to get a 70% ownership in the JV by making an investment of up to $88.5m in the project and in Arc Minerals
Arc Minerals intends to create a JV with Anglo American for its copper-cobalt project in Zambia. (Credit: swm/Freeimages)
Arc Minerals, a junior exploration company, has signed an agreement with an intention to form a joint venture (JV) for its copper-cobalt project in Zambia’s North-Western province with a subsidiary of Anglo American.
As per the proposed terms, Anglo American will be entitled to get a 70% ownership in the JV by making an investment of up to $88.5m. This includes cash consideration of up to $14.5m.
Arc Minerals will have a 30% stake in the joint venture after signing of the relevant documents.
The licences covering Arc Minerals’ copper-cobalt project are located in the Domes region of the Zambian copperbelt. They are located near First Quantum Minerals’ Sentinel and Kansanshi copper mines and Barrick Gold’s Lumwana mine.
Arc Minerals executive chairman Nick von Schirnding said: “This agreement represents a major turning point for Arc and follows many months of negotiations.
“I am delighted to be signing this agreement with Anglo American which will, upon execution and completion of the definitive agreements, result in the potential for significant investment by a reputable major mining company in the tenements in north west Zambia and a very exciting time ahead for us.”
Anglo American will acquire the JV stake in three phases. In the first phase, the company will have to fund exploration expenditures of $24m on or before the date that is 180 days after the third anniversary of the JV agreement.
The mining major should also make a cash payment of $14.5m to Arc Minerals in five tranches.
After the completion of phase 1, Anglo American will be able to acquire an additional stake of 9% in the JV by funding $20m to cover additional exploration expenditures. The payment has to be made within two years of the end of phase 1.
The company can acquire another 10% stake after the completion of phase 2 by funding $30m in the Zambian copper-cobalt project. The funding has to be made within two years of the end of phase 2.
According to Arc Minerals, the formation of the JV is subject to satisfactory due diligence, a restructuring of its assets, and negotiation and execution of definitive agreements.
It will also be contingent on approval by the relevant boards of directors, the required government and regulatory authorities, and other customary conditions, said the junior exploration company.