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Castillo Copper grants option to sell Zambia copper projects

Published by
Global Mining Review,


Castillo Copper Ltd (CCZ) has granted Hyperion a 12-month option to acquire 100%-owned subsidiary, Zed Copper, which owns four projects in Zambia’s copper-belt – including the prime Luanshya and Mkushi Projects – for total consideration of £3.75 million (AUS$6.7 million) in a value creating transaction.

Highlights

  • The Board has granted London-based Hyperion Copper a 12-month option to acquire 100%-owned subsidiary, Zed Copper, which owns four assets in Zambia’s copper-belt, including the prime Luanshya and Mkushi Projects.
  • Under the terms of the option agreement, Hyperion will pay a non-refundable US$100 000 fee (approximately AUS$142 000) to secure a 12 month exclusive option and, if exercised, issue £2.25 million (approximately AUS$4 million) in Hyperion shares to acquire 100% of the issued capital of Zed.
  • Further, CCZ will receive £1.5 million (approximately AUS$2.7 million) in Hyperion shares upon a global mineral resource estimate (MRE) of 200 000 t contained copper metal being delineated.
  • Hyperion, which owns a gold mining project located in Burkina Fasso, intends to list on the AIM market of the London Stock Exchange in 2H22 and raise funds to fully develop its African projects.
    • Under the terms of the agreement, CCZ’s shareholding will be no less than 25% post-Hyperion’s AIM-listing with the right to nominate one director to the Board.
  • The Board believes this is a positive outcome for all stakeholders, as it ensures the Zambia copper assets exploration potential will be fully developed, whilst any benefits will accrue to CCZ via retaining its shareholding in Hyperion,

The Board believes this is a positive outcome for all stakeholders since it secures a strategic partner that is committed to fully develop the exploration potential of the Zambia projects. Moreover, with Hyperion planning to list on the LSE’s AIM market in 2H22, CCZ is set to accrue benefits via retaining its shareholding in Hyperion post listing.

Hyperion is positioning itself as an Africa-focused, copper-gold explorer as it owns 100% of the Yansse Gold Project in Burkina Faso. Notably, the Yansse Gold Project is located in the highly prolific West African Birimian Terrane, which is host to some of the world’s largest gold deposits.

Castillo Copper’s Managing Director, Dr Dennis Jensen, commented: “Securing a development partner for our Zambia Projects has been a strategic priority to ensure optimal value creation. As such, the Board is delighted to have granted London-based, Hyperion Copper, the option to acquire the Zambia Projects. From the Board’s perspective, we now have a partner who will fund all future development work, whilst benefits accrue to CCZ via retaining the shareholding in Hyperion Copper post its AIM listing.”

Transaction terms

Under the option agreement, Hyperion will pay CCZ a US$100 000 (approximately AUS$142 000) option fee granting Hyperion an exclusive 12 month right to acquire 100% of the issued share capital of Zed, which owns four Zambia Projects.

At the conclusion of due diligence and upon exercise of the option, the consideration payable to Castillo is £2.25 million (approximately AUS$4 million) in Hyperion shares, subject to certain conditions precedent being satisfied or waived. The consideration shares must represent no less than 25% of the enlarged share capital of Hyperion upon its listing on the LSE’s AIM market which is expected to occur in 2H22.

The parties are currently preparing a definitive acquisition agreement.

Within five years from executing the definitive agreement and delineating a global MRE of 200 000 t contained copper metal on the Zambia Projects, Hyperion will issue Castillo £1.5 million in Hyperion shares based on a 10-day VWAP.

The option and definitive agreements will contain the following conditions precented, including:

  • Hyperion having conducted and being satisfied with legal, technical and financial due diligence on the project and the licenses.
  • All applicable and necessary consents, authorities and/ or approvals required from any applicable statutory or quasi-statutory body regulating the mining industry in Zambia consenting to the transfer of the licenses in accordance with the terms of the agreement.
  • The preparation and publication of an AIM admission document in respect of Hyperion (or the listed vehicle).
  • CCZ obtaining all regulatory approvals in relation to the transaction including but not limited to ASX, ASIC and shareholder approvals, where required.

Hyperion has agreed to assume responsibility for CCZ’s obligation to pay Zed vendors a net smelter return royalty of 2% on production of concentrate derived from mining activities on the Zambia Projects.

The following performance share obligations will remain with CCZ:

  • 46 875 000 performance shares, converting to an equal number of CCZ shares on delineation of a JORC resource of 200 000 t of contained copper at a minimum grade of 0.5% within five years of execution of the share sale agreement.
  • 46 875 000 performance shares, converting to an equal number of CCZ shares on completion of a prefeasibility study demonstrating an internal rate of return greater than 25% within five years of execution of the share sale agreement.

Read the article online at: https://www.globalminingreview.com/finance-business/23062022/castillo-copper-grants-option-to-sell-zambia-copper-projects/

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African mining news Copper mining news