Blackthorn Resources (ASX: BTR) is an Australian-based resources company with a diverse portfolio of African assets including zinc, gold, copper, nickel and platinum group metals.
The company's primary assets are in west and southern Africa targeting copper, zinc and gold. The company also seeks and evaluates other projects in Australia and internationally to add to the diverse mineral asset portfolio.
Blackthorn Resources pens agreement with Glencore International for Perkoa Zinc Project JV
Australian-based resources company Blackthorn Resources (ASX: BTR) has added another string to its mining bow after entering into a Heads Of Agreement with Glencore International in relation to the formation of a Joint Venture to commercialise the Perkoa Zinc Mine in Burkina Faso, West Africa.
Under the terms of the agreement, Glencore will provide or procure about US$72 million worth of funding in the form of project equity and loans to the JV to complete development of the Perkoa Project.
Glencore will hold a 50.1% interest in the project, Blackthorn will hold a 39.9% interest, and the State of Burkina Faso will continue to hold a 10.0% free carried interest upon the project being successfully commissioned.
Managing Director Scott Lowe said the Company believed the best way to finance the completion of the Perkoa development was a joint venture at the project level.
"Our analysis shows that the Glencore proposal provides value per share to shareholders that is superior to other alternative funding options," Mr Lowe said.
"Glencore is a strong and well-funded strategic partner, with widespread industry knowledge and expertise, as well as the ability to assist with reducing capital and operating costs.
"A major benefit of this proposal is that it does not dilute the interests of Blackthorn Resources’ shareholders in the Company’s other attractive development assets, including the Mumbwa copper project in Zambia which is in a joint venture with BHP Billiton."
The HoA proposes that Glencore be appointed manager of the JV, responsible for day-today operations and for sourcing the required debt funding facilities, including a working capital facility.
Glencore International is one of the world's largest suppliers of a wide range of commodities and raw materials to industrial consumers, with customers involved in industries such as automotive, power generation, steel production and food processing within a global network of operations as a source of Metals and Minerals, Crude Oil and Oil Products, Coal and Agricultural Products.
The companies intend to negotiate off-take sales agreements for all of Perkoa’s available base metal concentrate as a part of the JV agreement.
Glencore will purchase all of the Perkoa Project’s available base metal concentrates not otherwise committed to other customers. The specific terms and conditions of sales to Glencore will be negotiated and defined under a separate off-take agreement.
In formulating the HoA, Glencore has already undertaken certain due diligence in relation to the Perkoa Project, however, commencement of the JV will be conditional upon a number of issues including the following key matters such as Glencore finalising remaining due diligence investigations, execution of definitive and legally binding transaction documents and shareholder approval.
The proposed JV is subject to execution of binding transaction documents.
Subject to execution of binding transaction documents, Blackthorn Resources expects by the end of March 2010 to call an Extraordinary General Meeting of shareholders to consider the proposal and vote on the recommendation.
