Sandfire Resources NL has signed a binding conditional Sale and Purchase Agreement with Talisman Mining Ltd to acquire Talisman’s 30% interest in the Springfield exploration and mining joint ventures in the Doolgunna region of Western Australia. The purchase price comprises A$72.3 million for Talisman’s subsidiary, Talisman A Pty Ltd, on a debt-free and cash-free basis and an ongoing 1% Net Smelter Return (NSR) royalty payable to Talisman on any future discoveries at the Springfield joint ventures. Sandfire will also be required to pay stamp duty in relation to the Transaction and has also incurred other transaction costs.
Through its acquisition of Talisman A, Sandfire will also assume the existing 2.25% gross revenue royalty held by Taurus Mining Finance Fund payable on 30% of the copper and gold produced from Monty, capped at 29,700 t of copper and 16,500 oz of gold from the Monty deposit area (based on a 30% revenue share).
Consolidation of 100% ownership of the Monty copper-gold mine and surrounding exploration tenure strengthens Sandfire’s exploration and development pipeline in the Bryah Basin. The Springfield joint ventures include the Monty copper-gold deposit, currently being developed as a new satellite underground mine to feed Sandfire’s nearby DeGrussa copper-gold mine (the Springfield mining joint venture) and the surrounding exploration tenements (the Springfield exploration joint venture).
The package also includes Talisman’s interest in the Halloween West project.
Sandfire will fund the acquisition from existing cash reserves on hand of A$243 million (unaudited group cash as at 30 June 2018).
Sandfire CEO Karl Simich said, “We are pleased to be progressing this transaction to consolidate our interests in the Monty project and surrounding tenement interests. While copper prices have come down in recent weeks we remain committed to this acquisition and its value for shareholders of Sandfire and Talisman, and strongly believe in the building future strength in the copper market.”
DeGrussa mine, located 900 km northeast of Perth, is one of the Asia-Pacific region’s premier, high-grade copper mines. Construction and development was completed on time and on budget during 2012 at a total cost of approximately A$400 million.
Commencing with an initial two-year open pit mining operation which was completed in April 2013, the DeGrussa operation is based on a long-term underground mine delivering sulphide ore to an on-site 1.5 Mt/y concentrator.
The underground mine plan comprises over 38 km of lateral development, allowing for the simultaneous extraction of ore from multiple faces, on multiple lenses. Having four deposits gives Sandfire a strategic advantage from an underground mining perspective – providing production flexibility and enabling it to maintain consistent ore production of 1.5 Mt/y through the decline.
The Maiden Probable Ore Reserveifor Monty of 80,000 t copper (and 42,000 oz gold) is at the exceptionally high grade of 8.7% Cu. This places Monty amongst the highest grade copper mines globally.
Total Mine Plan copper-in-ore of 74,000 t over an initial ore production life of 30 months.