CUDECO’S largest Chinese investor is poised to take a bigger bite out of the Gold Coast company after offering to swap a major electrical contract for shares in the copper miner.
The deal also takes the pressure off CuDeco’s cash reserves to complete the Rocklands copper project, located near Cloncurry in north-west Queensland.
Sinosteel Equipment and Engineering Co, a China state-owned entity, has accepted responsibility for the entire electrical installation for the $300 million mineral processing plant at Rocklands.
Sinosteel already has undertaken the bulk of the construction work across the Rocklands project, and the latest agreement is seen as a major boost for CuDeco’s development timetable with civil works due to wrap up this week.
Under the memorandum of understanding revealed today, Sinosteel will be responsible for laying 330km of electrical cabling at Rocklands to run the facility’s major operational equipment.
“The unsolicited offer was made by Sinosteel believing that it would be in the interest of the project for them to complete the entire mineral processing plant,” says CuDeco in a statement to the ASX.
“This option decreases the immediate cash requirements from CuDeco, required for the completion of the project.”
Sinosteel is already CuDeco’s third-largest shareholder, with 17.3 million shares, or about 7.3 per cent of the company.
Details of how many CuDeco shares Sinosteel will acquire through the agreement have not been disclosed.
The offer to accept more shares is still subject to approval from both the Sinosteel and CuDeco boards.
However, Sinosteel alternatively has offered interest-free terms for the work if the share purchase deal does not proceed.
”If Sinosteel elect not to take the option to accept shares then they have offered CuDeco an interest-free deferred payment of the cash for the electrical installation,” says CuDeco.
The company says it has been approached by a number of major international companies offering funding options with a view to taking a stake in the Rocklands project.
The latest agreement comes on the heels of a deal with a Chinese smelter to take CuDeco’s native copper ore.
CuDeco says 170 tonnes of ore has already been shipped for test work.
CuDeco shares continued their rollercoaster ride this week, rising about 10 per cent to $1.25 today following news of the deal with Sinosteel.
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