Brisbane-based company PanAust Limited (PNA) will acquire Glencore Xstrata’s 80 per cent stake in the Frieda River Project in Papua New Guinea.
Glencore will gain US$75 million from the acquisition of the project which concerns one of the largest undeveloped copper and gold deposits in the world.
The sale amount will be paid over two instalments, with the first instalment of US$25 million upon transaction close and the second paid on December 31 2015.
Glencore will also take a two per cent net smelter return royalty on PanAust’s interest in the project to a total of US$50 million.
“The transaction delivers PanAust access to a truly world class copper gold deposit that provides the basis for sustainable long-term growth of the business,” says PanAust managing director Gary Stafford.
In addition to the purchase agreement, PanAust will become a cornerstone shareholder in Highlands Pacific Limited, which holds the remaining 20 per cent interest in the project.
The company will take an initial placement of Highland’s ordinary shares equating to 7.5 per cent of the issued share capital.
The share agreement is in line with PanAust’s strategy to ensure access to sufficient mineralisation beyond its Phu Kham Operation in Laos.
“It gives us additional options within the asset portfolio and the opportunity to leverage our experience as a successful project developer in Laos, where the terrain has a number of similarities to the area around Frieda River,” says Stafford.
PanAust’s development concept for the Frieda River will likely coincide with rising production levels scheduled for Phu Kham.
PanAust shares were three cents lower at $1.99 following the announcement.
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support