THE BOURSE WHISPERER: Southern Hemisphere Mining (ASX:SUH, TSX-V:SH) has struck a strategic agreement with TSX-listed base metals miner Lundin Mining Corporation and executed a terms sheet.
The deal will result in Lundin Mining spending up to US$35 million on exploration at Southern Hemisphere’s Llahuin copper-gold project in central Chile to earn a direct stake of up to 75 per cent over a six-year period.
Location map showing the Llahuin project. Source: Company announcement
Lundin Mining will also take an 11.5 per cent stake in Southern Hemisphere via a US$5 million share placement of19.8 million fully paid Southern Hemisphere shares at C25c a share on the TSX-V.
US$3 million of the placement is to be spent by Southern Hemisphere on the Llahuin project.
“Lundin Mining’s extensive experience in exploration, mine development and mine operations, as well as its immense financial standing, means this deal is a game-changer for Southern Hemisphere and Llahuin,” Southern Hemisphere managing director Trevor Tennant said in the company’s announcement to the Australian Securities Exchange.
Lundin Mining is a diversified Canadian base metals miner with operations in Portugal, Sweden, Spain and Ireland, producing copper, zinc, lead and nickel.
It also holds a development project pipeline, which includes its Neves-Corvo mine in Portugal and an equity stake in the world class Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo.
Southern Hemisphere last month announced a 36 per cent increase in resources at the Llahuin project, which now includes 436,000 tonnes of copper and 459,000 ounces of gold.
The resource upgrade contained a Measured and Indicated resource of 145 million tonnes grading 0.40 per cent copper equivalent with an additional 17 million tonnes grading 0.33 per cent copper equivalent in the Inferred Category.
Southern Hemisphere currently has a diamond core drilling campaign underway at the Llahuin project, which it said will be accelerated with the completion of the Lundin Mining share placement and farm in arrangements.
Under the terms sheet struck between the two companies, Lundin Mining will fund Llahuin project expenditures in stages with an initial US$3 million to be spent within three years.
A further US$3 million from the proceeds of the placement to Lundin Mining is to be spent on the Llahuin project, providing a US$6 million total initial committed expenditure.
After the total initial commitment is expended, Lundin Mining has the option to sole-fund a further US$10 million towards Llahuin project expenditures to earn a cumulative undivided 51 per cent interest in the project.
After completing this earn-in, Lundin Mining has the option to sole-fund an additional US$10 million within one year to earn a further 14 per cent interest for a total undivided 65 per cent interest in the Llahuin project.
Following this earn-in, Lundin Mining has the option to sole fund the last additional earn-in by spending a further US$12 million, within three years of obtaining a 51 per cent interest, to earn an additional 10 per cent interest in the project for a total undivided 75 per cent interest in the Llahuin project.