THE BOURSE WHISPERER: KBL Mining has signed a Memorandum of Framework Cooperation, an apparently fancier term for an MOU, with Chinese concern, Guangdong Guangxin Mining Resource Group (GMR).
GMR is a subsidiary of Guangdong Guangxin Holding (GGH).
GGH is a Chinese government-owned enterprise, and according to KBL, is the largest foreign trade group in Guangdong Province, Southern China.
The MOU covers a package that provides for the subscription by GMR for a 15 per cent fully-diluted shareholding in KBL and for the acquisition by GMR of a 25 per cent interest in KBL’s Mineral Hill mine.
The deal also allows for a discounted life of mine offtake for copper concentrates.
The Mineral Hill Mine is located 65 kilometres north of Condobolin in central western New South Wales.
Mineral Hill Mine. Source: Company image
“For a number of months, our senior management has been working with GMR management on this package that will be mutually beneficial for GMR and KBL’s shareholders,” KBL Mining executive chairman Jim Wall said in the company’s announcement to the Australian Securities Exchange.
“We are delighted that this opportunity, with a company the size of GMR, not only provides us with capital to rapidly expand Mineral Hill, to start developing Sorby Hills in 2012 and to pursue other opportunities, but provides us with a long term, stable partner for KBL that will assist our expansion from a single-mine company to a medium-sized multi-mine corporation.
“This can now occur in a timeframe substantially sooner than KBL could achieve on its own.
“The proposed transaction also underlines the potential of Mineral Hill in a relationship which gives GMR the benefit of KBL’s operational and management expertise.”
Wall conceded that a considerable amount of work is required by both parties before the transaction is finalised, saying he is pleased both parties intend to proceed expeditiously.
Completion of the transaction is conditional upon receipt of all necessary Australian and Chinese government approvals, shareholder approvals (including the approval of GMR’s parent company, GGH) and negotiation of the necessary Joint Venture Agreement, Share Subscription Agreement and Concentrate Sales Agreement no later than 31 March 2012.
Once GMR has completed on site due diligence and the necessary transaction agreements are finalised, KBL will seek the approval of its shareholders to the transaction at a meeting anticipated to be held by late March 2012.