Arc Minerals has entered into an agreement with a subsidiary of Anglo American plc. Under the agreement the parties intend to form a joint venture (JV) with respect to the company’s copper-cobalt project located in the North-Western province of Zambia.
Anglo American will have the right to retain a 70% ownership in the JV for an aggregate investment of up to US$88.5 million, including cash consideration of up to US$14.5 million.
Nick von Schirnding, Executive Chairman of Arc Minerals, comments:
“This agreement represents a major turning point for Arc and follows many months of negotiations. I am delighted to be signing this agreement with Anglo American which will, upon execution and completion of the definitive agreements, result in the potential for significant investment by a reputable major mining company in the tenements in north west Zambia and a very exciting time ahead for us.”
The key commercial terms of the JV that have been agreed in principle in the agreement are as follows:
- Upon signing of the JV Documents, a JV vehicle will be formed with initial ownership interests by Anglo American and Arc of 70% and 30%, respectively.
- Anglo American has the right to retain an Ownership Interest of 51%, by:
- Funding exploration expenditures equal to US$24 million on or before the date that is 180 days after the third anniversary of the Effective Date.
- Making cash payments to Arc Minerals totalling up to US$14.5 million, as follows:
- US$3.5 million upon signing of the JV Documents.
- US$1 million on the first anniversary of the effective date.
- US$1 million on the second anniversary of the effective date.
- US$1 million on the third anniversary of the effective date.
- US$8 million by the Phase I End Date.
- Following the completion of Phase I, Anglo American will have the right to retain an additional ownership interest equal to 9% (for a total ownership interest of 60%) by funding US$20 million of additional exploration expenditures within 2 years of the Phase I End Date.
- Following the completion of Phase II, Anglo American will have the right to retain an additional ownership interest equal to 10% (for a total ownership interest of 70%) by funding US$30 million within 2 years of the Phase II End Date.
- Anglo American, for as long as it holds the largest interest in the JV, shall have the right to nominate three directors and Arc shall have the right to nominate two directors. JV board decisions shall be adopted by simple majority vote.
The agreement sets out the core principles under which the JV will be formed subject to satisfactory due diligence, a restructuring of the company’s assets in preparation for the JV, negotiation and execution of definitive agreements, the approval of the transaction by the relevant boards of directors, and the relevant government and regulatory authorities and other customary conditions.
An exclusivity period has been agreed for up to 90 days to allow for due diligence, and up to an additional 90 days for the negotiation and execution of the JV documents.
Read the article online at: https://www.globalminingreview.com/mining/16052022/arc-minerals-forms-copper-cobalt-jv-with-anglo-american/