THE BOURSE WHISPERER: Blackthorn Resources (ASX: BTR) has received good news from its Joint Venture partner Glencore International.
Glencore has indicated it will provide an additional US$80 million in equity funding to complete construction and commissioning of the Perkoa zinc project in Burkina Faso and fund projected costs until the project becomes self-funding.
The previous funding package for the expanded Perkoa project totalled US$140 million and comprised:
– US$50 million in direct project equity provided by Glencore;
– US$70 million in two project loans provided by Glencore; and
– US$20 million working capital facility provided or arranged by Glencore.
Blackthorn has reached a new agreement with Glencore it says will cover funding required to complete the commissioning of the Perkoa project.
Additional funding of up to US$80 million will be provided by Glencore, which consists of approximately US$40 million to cover increased construction and commissioning costs and US$40 million to cover working capital and additional capital requirements up to 31 December 2013.
Under the new arrangement, Blackthorn has elected not to fund its share (US$35 million) of the US$80 million capital requirement and will instead undertake a strategic selldown/dilution of its interest in the project from 39.9 per cent to 27.3 per cent.
“We are extremely pleased to have reached this position with our joint venture partner Glencore in a prompt and commercial fashion,” Blackthorn Resources managing director Scott Lowe said in the company’s announcement to the Australian Securities Exchange.
“The terms on which Blackthorn Resources’ economic interest in the Perkoa project will be adjusted through the strategic sell-down/dilution reflects an agreed fair market valuation of what is a high quality near-to-production zinc-lead-silver asset.”
Blackthorn said the new agreement with Glencore provides it with a number of benefits, such as not being required to raise capital for the Perkoa project.
The deal also means Blackthorn maintains a material economic interest in the Perkoa project while preserving cash raised from a 2012 capital raising, which had been undertaken to progress the 100 per cent-owned Mumbwa copper project in Zambia.
“Over the past year and a half, the exploration success we have enjoyed at the Mumbwa project has resulted in Mumbwa becoming Blackthorn Resources’ flagship asset,” Lowe said.
“The capital raising we undertook last year was designed to allow us to accelerate our study work and ongoing exploration around this exciting copper project.
“The commercial outcome we have reached with Glencore will allow us to continue to develop the Mumbwa project while we maintain a meaningful equity position in the Perkoa project.
“For a company of Blackthorn Resources’ size and profile, we believe this is an appropriate balance to maintain.”