THE BOURSE WHISPERER: Latin Resources (ASX: LRS) has signed a binding terms sheet with Chilean company, Minera Activa to enter into a Joint Venture agreement on Minera Activa’s Filipina copper project in Chile, South America.
The JV allows Latin to earn into the project by payments over a four year period to potentially earn up to 100 per cent of the project.
“We are extremely pleased that we have secured a project that has a reported and current NI 43-101 resource that has the potential to take Latin Resources into copper production,” Latin Resources managing director Chris Gale said in the company’s announcement to the Australian Securities Exchange.
“The Filipina project also shows great exploration upside and also located in the northern part of Chile which has exceptional infrastructure including copper toll processing plants, power, smelters and refineries with a well-developed mining community.
“Chile is the world’s largest copper producer which therefore has well defined mining jurisdiction and laws Australia has a Free Trade Agreement with Chile along with a double tax treaty agreement.
“The Filipina project represents a tremendous value creating opportunity for Latin Resources with a potential near term production and cash flow generator for the company”.
The key terms of the Joint Venture are:
Latin Resources to make an investment into the project of US$2 million over an 18 month period to earn 25 per cent;
The company has an option to invest a further US$5 million to Bankable Feasibility Stage (BFS) to earn a further 24 per cent for a total of 49 per cent in the following 18 months (36 months). Latin must exercise this option to maintain its 25% interest;
Latin will have an option to acquire the remaining 51 per cent by paying US$2 million to Minera Activa by month 36 (to earn a further 6 per cent share to take Latin to 55 per cent) and a further payment of US$10 million to Minera Activa by month 48 for the remaining 45 per cent to take Latin to 100 per cent ownership;
On signing the JVA, Latin may appoint up to four nominees to a Joint Venture management committee and will have control of operations on the projects; and
Latin may, at its election, bring in a third party to assist with funding investment in the projects.
Latin Resources explained the mineral resource estimates are regarded as a foreign estimate and are not reported in accordance with the Australian 2012 JORC Code.