REDBANK SECURES KEY COPPER OFF-TAKE AND FUNDING AGREEMENT WITH GLENCORE
LANDMARK AGREEMENT TO UNDERPIN EXPANDING NORTHERN TERRITORY COPPER BUSINESS
Redbank Mines Limited (ASX: RBM) has taken a key step in its growth strategy as an emerging Australian copper producer after securing a key life-of-mine off-take agreement for its Redbank Copper Project in the Northern Territory with international commodities group, Swiss-based Glencore International AG. As part of the agreement, Glencore has agreed to underwrite $1.0 million of a $1.8 million rights issue also announced today to underpin Redbank’s growth objectives.
The off-take agreement and funding will add further momentum to the staged development of the Redbank Project, which Redbank acquired in December 2005 as part of a restructure and repositioning in the copper business. Stage 1 production commenced earlier this year, and the Company plans to build production to a level of 6-8,000 tonnes per annum of contained copper within 2 years by implementing Stages 2 and 3.
The off-take agreement covers current and future copper cement and/or cathode production from Stages 1 and 2 of the project, as well as future production of concentrates from the treatment of sulphides during Stage 3. Significantly, Glencore has agreed to purchase copper cement product from Stage 1 on deferred delivery terms, allowing for undisrupted revenue flow from copper production during the Northern Territory wet season.
Redbank is currently approaching targeted monthly production of between 80 and 100 tonnes of contained copper from Stage 1 of the Project, which commenced earlier this year. This vat leaching operation treats high-grade oxide copper together with heap leaching of transitional oxide and sulphide ore, producing a copper cement concentrate containing 80-85% copper. Stage 1 is expected to generate annualised gross revenue of between A$6.0-A$7.5 million over a period of between 15 and 18 months, laying the foundations for subsequent Stages 2 and 3.
In addition, Redbank has announced a one-for-three non-renounceable rights issue at a price of 7.2 cents per share to raise $1.8 million, as well as a $500,000 public share placement at a price of 7.5 cents, amounting to a total capital raising of $2.3 million.
Redbank has also agreed to provide Glencore with the opportunity to provide additional funding on commercial terms for the future development of the Project and related working capital requirements.
The Redbank Project, located near the Northern Territory/Queensland border, has extensive existing mine infrastructure and a JORC classified resource of 4.2 million tonnes at 1.5% copper for approximately 65,000 tonnes of contained copper metal. Stage 2 envisages copper production of 3-4,000tpa from oxide deposits, which is targeted to commence by the third quarter of 2007, while Stage 3 envisages production from sulphide material to produce 3 - 4,000tpa from mid-2008. Redbank Mines’ Managing Director, Mr Gino Vitale, welcomed Glencore’s interest in the Company and, in particular, the Redbank Copper Project, saying it represented a significant vote of confidence in the quality and potential of the Redbank Project.
“Securing a long-term buyer for output from the Redbank Copper Project, and the establishment of an ongoing relationship with Glencore, will enhance the bankability of the Project and expedite the development of Stages 2 and 3,” Mr Vitale said. “We look forward to working with Glencore to build our copper production substantially over the next 2-3 years.”
RBM Price at posting:
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