In a milestone for its A$10.8 million exploration joint venture, Ord River Resources (ASX: ORD) has lodged an application to the Foreign Investment Review Board (FIRB) on behalf of Guangdong Rising Asset Management Co., Ltd (GRAM).
As signalled in an earlier announcement, the JV company (JV Co) is seeking approval for GRAM's investment in ORD’s large scale Copper Flats Copper Project in Western Australia. GRAM and ORD will have 51% and 49% of JV Co respectively and will have equal board representation.
The investment will create new jobs and potentially open up a new area in WA for copper mining and the approval is likely to be granted.
ORD will vend 100% of Copper Flats Copper Project and its licenses in its entirety into JV Co after JV Co has received GRAM’s cash contribution.
Upon establishment of JV Co GRAM will initially contribute A$5 million in cash to the new company and will be exclusively for the Copper Flats Copper Project.
GRAM has agreed to make further contributions and increase its total cash contribution to A$10.8 million.
GRAM and ORD will make additional new investments in the Copper Flats Copper Project if required.
Immediately after JV Co receives GRAM’s initial A$5 million cash contribution, JV Co will pay ORD A$3 million.
GRAM and ORD have first right of refusal over each other’s interest in JV Co. As GRAM is a Chinese state owned entity it needs approvals from relevant Chinese regulators and FIRB approval is required.
Only after GRAM's total cash contributions reach A$10.8 million will the company earn its 51% interest in JV Co.
After a reasonable period GRAM’s ownership will be adjusted down to reflect its actual cash contribution to JV Co.
ORD is set to benefit from the agreement with the receipt of A$3 million cash which can be deployed in other projects as well as A$7.8 million dedicated funding for Copper Flats Copper Project.
ORD will retain a 49% interest which will be protected by its equal representation on JV Co board.
JV Co will be incorporated in Sydney and will use ORD’s office as its registered office. JV Co’s name will be decided at the time of registration.
The JV represents a large reduction in ongoing overheads and a new growth platform for ORD.