Havilah Resources Ltd (ASX:HAV) shareholders have voted overwhelmingly to approve grant of the option for OZ Minerals Limited (ASX:OZL) to acquire the Kalkaroo copper-gold-cobalt project and cement a strategic alliance.
This vote was the final condition remaining to allow the commencement of the Kalkaroo project study program and the strategic alliance copper exploration on the area of interest tenements in the Curnamona Province.
Over the past months, management personnel of both companies have been working closely on many planning tasks in preparation for the early commencement of the above initiatives, conditional on Havilah shareholder approval.
“First important step in our strategy”
Havilah chairman Simon Gray said: “Havilah is delighted to be working on the Kalkaroo project with OZ Minerals who are recognised as a highly successful South Australian based copper mine developer and operator.
“We have great faith in the copper credentials of the Curnamona Province and feel the proposed strategic alliance is the best way to realise the potential of this highly prospective, but under-explored geological terrain for the benefit of all stakeholders.
“We see this as the first important step in our strategy of realising the value of Havilah’s multi-commodity portfolio and monetising assets for the benefit of shareholders.”
Transaction overview
The Kalkaroo Project consists of a Mineral Resource estimate of 245 million tonnes at 0.45% copper and 0.39 g/t gold.
OZ Minerals will now commence a study of up to 18 months to evaluate the potential of the Kalkaroo Project and the option to acquire 100% of the project for a purchase price of $205 million.
OZ Minerals may elect to not exercise the Kalkaroo option at any time during the option period provided 5,000 metres have been drilled or a shortfall payment (metres not drilled multiplied by $400) is paid to Havilah.
Should OZ Minerals purchase the project the agreement provides a deferred contingent consideration of $65 million, upon a 30% uplift in Kalkaroo’s Measured and Indicated Resource estimate as well as a copper price linked contingent payment in each year of production up to a maximum cumulative amount of $135 million (which will be indexed annually by the Consumer Price Index).
Under the strategic alliance, OZ Minerals will pay Havilah $1 million per month during the alliance period (up to a maximum of $18 million), with 50% of the payments directed towards Havilah identifying and advancing nearby exploration opportunities within the Area of Interest tenements in the Curnamona Province.
OZ Minerals will have certain rights to accelerate exploration in discoveries of copper dominant mineralisation in the alliance area and to participate in developing any related projects.
Alliance provides funding and expertise
“Funding provided under the strategic alliance would allow us to accelerate exploration for new copper deposits in the region that could potentially be additive to Kalkaroo, as well as advancing our other promising mineral projects south of the Barrier Highway,” Havilah Resources technical director Dr Chris Giles said in an earlier release on the deal.
“We see the proposed transaction as the first important step in our strategy of realising the value of Havilah’s multi-commodity minerals portfolio by either production, sale or farm-out with suitable well-funded partners, as stated in the letter from the Board of Directors in the 2021 Annual Report.”