Arc Minerals Ltd (LON:ARCM) will only pay 16% of the cash costs for the drilling programme at its Zamsort copper-cobalt project in Zambia after agreeing a drill-for-equity deal with the local contractor.
Under the contract, payment for 50% of the drilling costs will be made in Arc shares, with the remaining contribution paid by minority partner Kopara Investments.
The drilling contractor has agreed to only trade a certain volume of the shares, which Arc said it will monitor.
With the drill-for-equity deal covering an initial 10,000 metres of drilling at Zamsort, Arc will pay a first allotment of 3.85mln shares at an effective price of 4.78p apiece.
“This transaction underscores the confidence that our drilling company has in the quality of our prospects - and at the same time strengthens our capital structure,” said Arc chairman Nick von Schirnding.
“We look forward to an active period of reporting back on our drilling results from our exciting Zambian copper project.”
The AIM-listed company also issued 1.04mln shares for cash value of £25,000 after an investors exercised their warrants.