Tertiary Minerals’ Zambian subsidiary, Copernicus Minerals, has entered a binding letter of agreement (BLA) with First Quantum Minerals concerning the Mukai Copper Project in Zambia.
The agreement grants First Quantum a 24-month exploration due diligence period.
During this time, First Quantum is committed to funding a minimum of $1.5m in exploration expenditures, with at least $500,000 allocated for the first year, known as Phase 1.
Upon successful completion of the initial exploration, First Quantum may opt to earn a 51% stake in the Mukai exploration licence.
This is contingent on the identification of a mineral resource containing at least 80,000 tonnes of copper within an additional 24 months, referred to as Phase 2.
First Quantum can further increase its interest by an additional 29% by completing a mining study and declaring an intent to mine within a subsequent 24-month period, referred to as Phase 3.
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First Quantum is obligated to solely fund the project until the necessary regulatory and governmental permits for the commencement of construction are obtained.
At this juncture, Copernicus has the option to either contribute at a 20% equity level or dilute its stake to a minimum of 10%, at which point its interest automatically converts to a 1.5% net smelter return royalty.
Should First Quantum progress through all phases, it is expected to make cumulative payments to Copernicus amounting to $2m over the course of the three 24-month phases outlined in the BLA and any subsequent agreements.
The BLA’s execution is contingent upon various conditions, including the renewal and transfer of licences from Mwashia Resources to Copernicus, which is currently under way.
The Mukai licence is located adjacent to First Quantum’s Trident project, which includes the operational Sentinel copper mine and the newly developed Enterprise nickel mine.
The Sentinel processing plant is capable of processing 55 million tonnes of copper ore annually.
The overarching goal of the proposed joint venture between First Quantum and Tertiary is to discover copper and/or nickel deposits that can be swiftly developed to provide additional feed for the Trident processing facilities.
Tertiary Minerals executive chairman Patrick Cheetham said: “First Quantum is strongly motivated to find additional ore feed for Sentinel and, at Mukai, we have defined a priority soil anomaly along strike from copper mineralisation already drilled by First Quantum on its adjacent Tirosa Prospect.”
