your initial deposit *subject to change and depends on individual circumstances.
UPDATE: EMED Mining makes 'significant step' as announces land acquisition dealJuly 09 2012, 11:08am
---Adds share price and broker comment ---
The land is required to restart operations at the Spanish mine and will allow the deposit of tailings from the proposed operations.
Investors cheered the news and the shares were up 8.89 per cent at 11.04am, to stand at 12.25 pence each.
The sale and purchase agreement is with Rumbo 5-Cero S.L, which owns the land.
Rumbo is part of an Andalucían investment group.
In addition, Rumbo and the company also plan to enter a 50:50 joint venture to test and possibly exploit some tailings dumps. EMED will be the operator.
Partly to fund the acquisition of the land, EMED also announced today that major shareholder Yanggu Xiangguang Copper (XGC) would subscribe for around 32 million shares at 10 pence a share to raise US$5 million.
Managing director of EMED, Harry Anagnostaras-Adams, said: "The agreement with Rumbo is a major step forward for the planned restart of the mine. It not only facilitates ownership of over 95 per cent of the project lands, but also establishes a long term commercial alliance with an important Andalucían business group."
"The concurrent support from our shareholders is greatly appreciated and we are pleased to welcome an even closer relationship with major Chinese copper smelter group XGC who now also intends to appoint a representative to our board of directors."
He added: "We are delighted with the continued progress on all fronts. We have been working hard with all parties to trigger the Rio Tinto Copper Mine restart by the end of 2012 - with the infrastructure in place, a proven resource to mine and financing arrangements conditionally agreed, we are well positioned to recommence mining operations as early as possible once regulatory approvals permit."
The total cost of the land acquisition is €10 million to be made up of €1mln in cash on execution of the sale and purchase agreement and €3.5 million payable in cash on closing the deal - no later than September 28 this year.
Thirdly, €5.5 million to be satisfied by the issuing of around 48.5 million EMED shares at 9.14 pence each to Rumbo.
EMED has also granted Rumbo a royalty for a decade of up to US$250,000 per quarter where the average of the LME copper price or the sale price achieved by EMED Mining is US$2.60per lb or more.
This royalty starts on the earlier of 18 months after the first sale of copper from the mine or six months after a continuous rate of 9 Mtpa has been reached.
XGC currently holds around 10.84 per cent of the firm's capital. On completion of the subscription, it will own an interest of around 13.48 per cent.
City broker Fairfax, which rates the stock a 'buy', said the acquisition was an important step towards the re-start of the mine and expects the shares to continue to re-rate from now.
"The best case scenario will be for a mine restart in the third quarter of 2013 with administrative standing achieved in Q3 2012, landowner issues settled and hot commissioning a year later," said veteran mining analyst John Meyer.
"Now the major part of landowner negotiations have been reached, there is no requirement for a lengthy expropriation process."
Meyer added that there was "significant upside" to the shares once administrative standing - the approval of the firm's mineral rights - was achieved which will trigger the process to re-start the mine.
"The company has secured the majority of its financing requirements through debt facilities and offtakes once permits are in place and there is scope for resource potential to boost project economics," said the analyst.
Fairfax targets a price of 32 pence each for the shares.
Once up and running it is expected that the Rio Tinto copper mine will produce 37,000 tonnes of copper each year from 9 million tonnes of ore.