Strategic Minerals Plc (LON:SML) has entered into a binding term sheet to acquire, subject to due diligence, the Leigh Creek copper mine in South Australia from Resilience Mining Australia.
Leigh Creek represents a near-term low-capex copper production opportunity with early cashflow generation potential.
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It has three approved mining leases that cover a number of copper oxide deposits, including Lorna Doone, Lynda, Mountain of Light (Rosmann East and Paltridge South) and the Mount Coffin deposit.
A resource of 3.61mln tonnes at 0.69% copper for 24,900 of copper metal forms the base of the project. Additional, non-JORC compliant, ore sources of 1.8mln tonnes at 0.68% copper have also been identified within existing mining leases.
A feasibility study was completed by Terra Consulting in November 2016, focusing on treating oxide copper initially from two open pits (Lorna Doone and Lynda) via a heap leach process to recover the copper into a copper sulphate solution.
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The copper would then be extracted into a copper cement via two existing Kennecott cones. The processing infrastructure to achieve this is already in place and has been under care and maintenance, although it is proposed to relocate the plant closer to the initial pit.
Under the terms of the proposed transaction, Strategic Minerals would pay for initial due diligence and provide loans to Leigh Creek. It would the pay A$1mln in staged payments, subscribe for shares in the current owner, LCCM, and grant a significant royalty over production.
"The proposed acquisition of Leigh Creek Copper Mine is a consistent step in the Company's growth strategy of acquiring and developing projects in minerals/metals that we expect to have demand/price upside over the next 3 to 5 years,” said Strategic Minerals managing director John Peters.
“The project has near term production and cash flow potential, local product demand and excellent growth prospects, through further exploration or surrounding tenements.”
Shareswere down 0.1% to 2.34p on Monday afternoon.
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