Arc Minerals Limited (AIM:ARCM) has struck a deal to acquire a large exploration licence in Zambia’s Copperbelt with the London-listed group looking to strengthen its position in one of the world’s most sought-after copper-producing regions.
The company, which is focused on developing so-called Tier 1 copper assets, said on Monday it had conditionally agreed to acquire the 311 square kilometre Chingola Project, along the same geological trend as existing operations owned by Vedanta Resources and Moxico Resources.
The project is being bought through Arc’s local subsidiary, Foreland Minerals, which will take over the licence from Brxton Construction. The deal remains subject to due diligence and regulatory sign-off.
"The acquisition of the Chingola Project is another important step in Arc's strategy to expand its presence in the Zambian Copperbelt," said chairman Nick von Schirnding.
"We have pursued this asset for the past 18 months in a highly competitive environment; being located in the northeastern part of the copper belt is very attractive, with historically higher grades than in the north-west."
The terms of the deal include an upfront cash payment of $50,000, followed by a series of staged payments tied to exploration milestones.
These include $25,000 in Arc shares once the deal completes, and a further $250,000 in cash and shares when drilling begins or within two years. Additional payments will be triggered if Arc confirms a resource of more than 500,000 tonnes of copper and completes a feasibility study. Brxton would also retain a 2% royalty on future production, capped at $5 million.
"We will start a comprehensive soil sampling programme imminently, which is fully funded, and we look forward to reporting back to shareholders on our initial findings," said von Schirnding.
"Separately, we are in the process of finalising the upcoming drill programme at the Anglo JV and preparations are underway at site."
The jewel in the crown is Arc's crown is the aforementioned joint venture with Anglo American, worth $14.5 million in staged payments to the AIM-listed group, along with a commitment to spend $74 million developing the licences pieced together by the junior mine developer.
For that, it can earn up to 70% of the project, which covers approximately 767km² in Zambia’s North Western Province, within the renowned copperbelt.
The area is home to world-class operations such as First Quantum Minerals' Sentinel and Kansanshi mines, and Barrick’s Lumwana mine.