THE BOURSE WHISPERER: Blackthorn Resources has announced a US$40 million, 40 per cent expansion at its Perkoa Joint Venture Zinc Project with Glencore International, in Burkina Faso, West Africa.
In 2011 Blackthorn received an investment proposal from joint venture partner Glencore (50.1per cent) to enhance the business case for the Perkoa Joint Venture Project, which included:
- Modifying the process plant configuration to include silver/lead concentrate and zinc concentrate product streams
- Increase plant throughput capacity by 40 per cent
- Open-cut mining to supplement the underground mine.
The project expansion improves the economics and risk profile of the project to the company via unit cost reductions, commodity diversification, and increased production volumes.
Funding for incremental investment will be via an additional US$40 million project finance facility to be provided by Glencore to the joint venture.
Total project finance will increase to US$70 million, which includes the original US$30 million senior facility.
Subject to finalisation of the funding facilities in the form currently negotiated, following completion of construction works and receipt of sufficient sales proceeds, a US$5 million special dividend will be payable to Blackthorn from 50 per cent of available free cash flows generated from zinc, lead and silver sales.
Broker Consensus Commodity Prices
Source: Company announcement
“The addition of silver and lead credits, plus the lower operating costs made possible through open-cut mining and increased throughput makes the project more robust and capable of withstanding zinc market volatility,” Blackthorn managing director, Scott Lowe said in the company’s announcement to the Australian Securities Exchange.