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Coppermoly unveils Barrick deal

Monday October 12, 2009, 5:47 pm


Copper, gold and molybdenum explorer Coppermoly Ltd has unveiled a deal with a subsidiary of Canadian miner Barrick Gold Corp.

Under the agreement, Barrick can pay up to $20 million to earn a 72 per cent interest in Coppermoly's three tenements in Papua New Guinea.

The farm-in and joint venture arrangement would see Barrick (PNG) Exploration Ltd subscribe for more than six million Coppermoly shares, at 0.9 cents, representing five per cent of the company.

Shares in Coppermoly jumped on news of the deal, and closed up 4.5 cents, or 42.86 per cent, at 15 cents.

Barrick will spend a minimum of $3 million in the first two years on the project, Coppermoly said in a statement.

After that period if it withdraws before earning a 72 per cent equity in the farm-in, it will not retain any interest in the exploration licences.

Coppermoly has three tenements in PNG on New Britain Island.

If Barrick does earn a 72 per cent equity, Coppermoly can elect that its share of ongoing costs towards a feasibility study be delayed, and repaid from 50 per cent of its share of revenue.

Coppermoly managing director Peter Swiridiuk said the deal showed the potential of his company's New Britain projects.

"Should a major deposit be discovered and developed by Barrick, there will be little or no requirement to dilute shareholder equity in order to fund our 28 per cent share until a feasibility study is completed," Mr Swiridiuk said.

"After this deal is completed Coppermoly will also be cashed up with approximately $2.8 million in cash," he said.