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Venturex Resources makes transformative deal to acquire copper zinc project

Last updated: 15:55 21 Jan 2011 AEDT, First published: 14:55 21 Jan 2011 AEDT

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Venturex Resources (ASX: VXR) has entered an agreement to acquire the Panorama Copper Zinc Project, transforming the company into a significant low-cost copper zinc (Cu-Zn) developer.

This is a potential company transformative transaction changing the dynamics of the company.

Venturez will acquire the project from CBH Resources (ASX: CBH) for $26.2 million cash and an accompanying zinc off-take agreement to Toho Zinc Co Ltd (TYO: 5707).

The deal will be funded through a A$36.8m capital raising comprising a share placement and a 2:5 fully underwritten non-renounceable accelerated entitlements issue.

The proceeds will also provide working capital to fast track a Definitive Feasibility Study of the combined projects.

The acquisition will utilise existing infrastructure to create a centralised processing hub at Whim Creek in the Pilbara region of Western Australia, enhancing the economics of the projects.

The Panorama Project is the largest known VMS deposit in the Pilbara, located 162km SE of Port Hedland.

It contains a JORC Mineral Resource of 19.3 million tonnes (Mt) at 1.2% Cu and 3.2% Zn, and previous feasibility studies have confirmed a high grade core amenable to large scale underground mining.

Total Resources, inclusive of existing Whim Creek Resources, have recently increased to 27Mt at 2.2% Cu EQ (>580,000t Cu EQ).

Venturex is targeting an annual production of 40,000t Zn and 16,000t Cu plus lead, silver and gold credits.

Consideration for the acquisition comprises:

- a deposit of A$750,000, which has been paid;
- a final completion payment of A$25.45m, subject to satisfaction of conditions precedent (including successful completion of the capital raising), by 1 March 2011, and;
- the grant of zinc off-take rights to Toho Zinc capped at 230,000t of zinc in zinc concentrate from Panorama (or Venturex’s other Pilbara Operations) on international benchmark terms.

Venturex intends to raise A$8.8 million via a private placement at 9 cents per share and $28.0 million via a fully underwritten accelerated 2:5  non-renounceable entitlement issue at 9 cents per share.

Under the entitlement issue, shareholders subscribe for 2 new VXR shares for every 5 VXR shares held at 9 cents.

The entitlements are non-renounceable and will not be tradeable on the ASX or otherwise transferable.

Argonaut Capital Limited is the lead manager, underwriter (entitlement issue only) and book runner.

Venturex’s largest Shareholder, Regent Pacific, has committed to take up its full entitlement and sub-underwrite a major portion of the entitlement issue.

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