Altona Mining: Major Chinese Construction Group to Contribute US$214 Million to Cloncurry Project

(firmenpresse) - Altona Mining: Major Chinese Construction Group to Contribute US$214 Million to Cloncurry Project

26 June 2015

· Framework Agreement signed between Altona and SRIG

· SRIG to contribute US$214 million cash to the Cloncurry Project

· Altona to contribute the project and US$38 million cash

· Cloncurry Project funded to production through joint-venture

· SRIG to hold 60% of joint-venture Altona to hold 40%

· SRIG to pay US$2 million deposit


Overview

Altona Mining Limited (Altona or The Company - http://bit.ly/1NffIhu) is pleased to announce it has concluded a binding Framework Agreement with Sichuan Railway Investment Group (SRIG). The agreement is subject to certain conditions and is described more fully in the Appendix.

The parties have agreed to establish an incorporated joint venture holding Altonas Cloncurry Project located in north-west Queensland, with SRIG to contribute cash of US$214.46 million and have a 60% interest in the joint venture. Altona will retain a 40% interest in the joint venture and is to contribute the Cloncurry Project and cash of US$38 million. The transaction values the Cloncurry Project on a pre-cash contribution basis at US$105 million.

Altona can meet its immediate obligations under the agreement from its existing A$47 million of cash resources.

The Cloncurry Project offers a large resource of 287 million tonnes at 0.6% copper, 0.04g/t gold for 1.65 million tonnes contained copper and 0.4 million ounces gold and is close to infrastructure.

The joint venture will seek to develop a mine at Little Eva which is situated within the Cloncurry Project. A Definitive Feasibility Study announced by Altona on 13 March 2014 for the Little Eva development anticipates the construction of a 7 million tonne per annum open-pit mine and flotation plant capable of producing 39,000 tonnes per annum copper and 17,000 ounces gold over an initial mine life of 11 years.

The cash to be contributed by the joint venture partners of US$252.46 million would exceed the estimated capital cost (A$294 million) of the Little Eva mine.

Altonas 40% equity share of annual production from the Cloncurry Project would be substantial at approximately 15-16,000 tonnes of copper and 7,000 ounces of gold, representing significant cash flow attributable to Altona.

Please visit www.altonamining.com for a PowerPoint presentation and video presentation by Managing Director, Dr Alistair Cowden.

Commentary

Altona Mining Managing Director Dr Alistair Cowden said:

We are delighted to announce this major partnership on the Cloncurry Project with SRIG. The contribution to be made by SRIG is based on an agreed value for the Project of US$105 million which clearly exceeds that implied by the companys share price.

On completion of the transaction, the project will be fully funded to production without recourse to equity or debt markets. The joint venture will have US$252 million in cash plus the Cloncurry Project which is valued at US$105 million by the proposed transaction.

Once the project is in production it will sustain approximately 280 new direct jobs and Altonas 40% interest will equate to 17,000 tonnes of copper equivalent production.

We are particularly pleased that this announcement comes 11 months after the announcement of the sale of our Finnish assets and only 3 months after the resulting dividend and return of capital.

About SRIG

SRIG was established in 2009, is based in Chengdu in south-western China and is 100% owned by the Sichuan provincial government. The groups principal businesses are in the road, bridge and rail construction and management sectors. SRIG had total assets of US$26.8 billion in 2014 and revenues over US$6 billion. It has more than 20,000 employees. SRIG has signalled its intention to diversify into other industries both within China and internationally.

SRIG has 24 operating subsidiaries including SRBG, listed in Shanghai which operates toll roads, bridges and hydropower stations. It has a market capitalisation of US$3 billion.

CCXI, a Moodys company, rated SRIG as AA+ with a stable outlook for a 2014 bond issue of approximately US$320 million. CCXI noted SRIGs expertise, highlighting that SRIG was the first Chinese enterprise to secure an overseas bridge construction contract (Norway).

Details of the Framework Agreement

SRIG will pay a US$2 million deposit to secure an 8 month exclusivity period. The deposit is refundable only in certain circumstances. A break fee of US$2 million is also payable by Altona in certain circumstances.

SRIG will contribute funds in two tranches. The first tranche of US$199.5 million will be paid after execution of formal documentation and satisfaction of all conditions precedent, which includes: SRIG confirmatory due diligence, completion of an independent valuation exceeding US$105 million, completion of formal documentation, Chinese regulatory approvals and approval from the Australian Foreign Investment Review Board (FIRB). The second tranche of US$14.96 million is to be paid 12 months later.

Altona will contribute the project and a total of US$38 million cash. This will be paid in two tranches of US$28 million and US$10 million matching SRIGs contributions on completion and 12 months thereafter.
Altona will be the initial manager on establishment of the joint venture and the usual commercial arrangements applying to joint-ventures will apply.

The parties are targeting the execution of the formal agreements by 30 November 2015 and a close of the transaction prior to February 2016. Hartleys Limited is corporate advisor to Altona.

Further information on this agreement is appended to this release.

Please direct enquiries to:

Alistair Cowden
Managing Director
Altona Mining Limited
Tel: +61 8 9485 2929
altona(at)altonamining.com

David Tasker
Professional Public Relations
Perth
Tel: +61 8 9388 0944
david.Tasker(at)ppr.com.au

Jochen Staiger
Swiss Resource Capital AG
Tel: +41 71 354 8501
js(at)resource-capital.ch

About Altona

Altona Mining Limited is an ASX listed company which recently sold its successful Outokumpu mine in Finland and is now focussed on a major copper development project in Australia.

The Cloncurry Copper Project near Mt Isa in Queensland is one of Australias largest undeveloped copper projects. The first development envisaged is the 7 million tonnes per annum Little Eva open pit copper-gold mine and concentrator. Little Eva is fully permitted with proposed annual production1 of 38,800 tonnes of copper and 17,200 ounces of gold for a minimum of 11 years. A Definitive Feasibility Study was published in March 2014. Total resources contain some 1.65 million tonnes of copper and 0.41 million ounces of gold.

Altona Mining is listed on the Australian Securities Exchange and the Frankfurt Stock Exchange.

1Refer to the ASX release Cost Review Delivers Major Upgrade to Little Eva dated 13 March 2014 which outlines information in relation to this production target and forecast financial information derived from this production target. The release is available to be viewed at www.altonamining.com or www.asx.com.au. The Company confirms that all the material assumptions underpinning the production target and the forecast financial information derived from the production target referred to in the above-mentioned release continue to apply and have not materially changed.

Competent Persons Statement

Information in this ASX Release that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Dr Alistair Cowden BSc (Hons), PhD, MAusIMM, MAIG who is a full time employee of the Company and who has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Alistair Cowden consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Copper equivalence

When used, copper equivalent refers to copper in concentrate produced, or planned to be produced. It does not refer to metal contained within insitu resources, reserves or drill results. The copper equivalent grade is calculated by factoring the copper grade by revenue from all metals (NSR) being copper, gold and silver.

Appendix: Material terms of the Framework Agreement

The Framework Agreement sets out the terms on which Altona Mining Limited (Altona), Altonas 100% owned subsidiary, Roseby Copper Pty Ltd (RCPL) and Sichuan Railway Investment Group Co Ltd (SRIG) intend to proceed with the development of the Cloncurry Project (Project) through an incorporated joint venture of which AOH will hold 40% of RCPL and SRIG will hold 60% of RCPL.

Under the Framework Agreement the parties agree as follows:

· Formal Agreements: to proceed with the transaction via a subscription agreement and a shareholders agreement (together the Formal Agreements) and to use reasonable endeavours to negotiate the Formal Agreements in good faith. The key terms of the Formal Agreements are set out below along with the conditions precedent to those agreements;

· Escrowed Deposit: that, subject to signing an escrow agreement with SRIG, SRIG will pay a deposit of US$2 million to an account with the Bank of China be held in escrow and only returned to SRIG in certain circumstances such as Australian or Chinese regulatory approvals are not obtained or other reasons not attributable to SRIG;

· Exclusivity: that Altona and RCPL must deal exclusively with SRIG and must notify SRIG if it receives any indications of interest in the Project. The exclusivity period commences from signing the Framework Agreement and ends 270 days later (or longer as agreed) or earlier if the Framework Agreement is terminated (End Date);

· Break Fee: if Altona or RCPL breaches exclusivity or there is a change of control resulting in the transaction not closing Altona and RCPL must pay a break fee of US$2 million;

· Agreed Programme: Altona will complete an agreed programme of activities (with budgeted expenditure of US$2.6 million during the remainder of 2015. Subject to being audited, this expenditure can then be applied as a contribution towards Altonas cash subscription under the subscription agreement; and

· Management of RCPL: Altona will be the manager of RCPL for an initial 3 months, or such longer period as agreed, on the terms of a management agreement to be signed on closing. The parties are to use reasonable endeavours to enable RCPL to become self-reliant.

Key terms of Subscription Agreement

Shares in RCPL are to be issued in two tranches as set out below:

Tranche 1 payable on Tranche 2 payable 12
satisfaction of the months
conditions later
precedent

Altona US$28 million1 US$10 million
SRIG US$199.5 million2 US$14.96 million
1 Less any amount credited as expended to the agreed programme of works.
2 Less the $US2 million deposit.

If any party fails to contribute its share of tranche 2 then RCPL may raise the money from the other party or a third party and the interest of any non-paying party will dilute accordingly.
Key terms of Shareholders Agreement

Altona will appoint two directors to RCPL and SRIG will appoint 3 directors including the Chairman. The directors will vote in accordance with the shareholding of their appointing shareholder. The following decisions of the board of RCPL must be unanimous:

· decisions to issue shares or borrow money;

· decisions to sell, dispose or surrender RCPLs assets other than in ordinary course of business; and

· a decision to mine or approve a programme and budget where the capital costs for building the project exceed those detailed in the March 2014 definitive feasibility study by more than 10%.

After the subscription monies are expended, Altona and SRIG will be liable to fund RCPL pro rata either by debt or equity as the parties agree. In the event of a default, the non-defaulting shareholders have an option to acquire the defaulting shareholders interests at a market value to be agreed or determined by an independent expert.

50% of any cash surplus will be applied to the repayment of shareholder loans and no less than 50% of the profit will be distributed by dividends.

Conditions Precedent
The Formal Agreements are to be conditional on the following being satisfied within 270 days of the date of the Framework Agreement or later date as agreed

· SRIG obtaining all regulatory consents and approvals from SASAC of Sichuan Province; and

· SRIG obtaining FIRB approval on conditions acceptable to SRIG.

Closing under the Formal Agreements is also conditional upon, but not limited to, the following:

· execution of Formal Agreements;

· obtaining consents under agreements with third parties;

· there being no error or misleading or inaccurate information contained in the data room or data which is withheld which has a material adverse effect on the Project;

· SRIGs due diligence revealing information which has a material adverse effect on the Project;

· Altona having entered into a binding agreement with RCPL with respect to Altonas subscription of US$38 million for the shares in RCPL, and Altonas first tranche of US$28 million being paid up into RCPL;

· the transfer of assets related to the Cloncurry Project currently held by Altona and Roseby Copper (South) Pty Ltd being transferred to RCPL;

· RCPL not owing any debt and no security interests over any securities or assets of RCPL;

· there being no change in the business or assets of RCPL which has a material adverse effect;

· SRIG appointing an international independent valuer to value the Project using Bloomberg or similar consensus pricing for copper, gold and currency and the VALMIN Code methodology and the valuation of the Project being no less than US$105 million; and

· SRIG obtaining all approvals from the Chinese government.

If the conditions in connection with approvals from Chinese government, FIRB approval or execution of the Formal Agreements are not met by the End Date, any party may terminate the Framework Agreement and if any other conditions are not met, SRIG may terminate that agreement.

For the purposes of the Framework Agreement, material adverse effect of the Project means an effect on the financial conditions, operations or prospects of the Project when compared to the March 2014 definitive feasibility study such that:

· a loss of 10% or more in the grade or size of the reserve from that described in that study;

· the IRR for the Project falls below 19%, which IRR is to be calculated on the same basis as that in that study, but using:

- the Bloomberg or similar consensus pricing for copper, gold and currency; and

- a discount rate taking account of the Project being in Australia, being fully equity funded and having granted mining permits and key approvals;

· the value of the Project is equal to or less than US$105 million;

· a reduction of 10% or more in the recovery rate from that described in that study.



Summary of Mineral Resource estimates for the Cloncurry Project
DEPOSTOTAL CONTAINEMEASURED INDICATED INFERRED
I D
T
METAL
TonGrade CoppGolTonGrade TonGrade TonGrade
nes er d nes ne nes

milCu Au tonnounmilCu Au milCu Au milCu Au
lio es ceslio lio lio
n n n n

% g/t% g/t% g/t% g/t
COPPER-GOLD DEPOSITS
Littl1050.50.0546,29537.0.600.045.0.40.023.0.50.1
e .9 2 9 000 ,001 9 0 6 8 9 0 0
Eva 0

Ivy A7.50.50.043,017,- - - 5.40.60.02.10.40.0
nn 7 7 00 000 0 8 9 6
A
Lady 14.0.50.278,085,- - - 3.60.60.210.0.50.1
Clayr0 6 0 00 000 0 4 4 4 8
e
A
Bedfo1.70.90.217,011,- - - 1.31.00.20.40.80.1
rd 9 0 00 000 4 1 3 6
A
S1290.50.1684,40937.0.600.055.0.40.036.0.50.1
ub-to.1 3 0 000 ,001 9 3 9 9 7 1 2
tal 0

COPPER ONLY DEPOSITS
Black76.0.6 475,- 27.0.68 6.60.6 42.0.5-
ard 4 2 000 0 0 7 9
A
Scanl22.0.6 143,- - - 18.0.6 3.80.6-
an 2 5 000 4 5 0
A
Turke21.0.5 123,- - - 17.0.5 3.40.5-
y 0 9 000 7 9 8
Cree
k

Longa10.0.6 69,0- - - - - 10.0.6-
mundi4 6 00 4 6
A
Legen17.0.5 94,0- - - - - 17.0.5-
d 4 4 00 4 4
A
Great6.00.6 37,0- - - - - 6.00.6-
1 00 1
South
ern
A
Carol3.60.5 19,0- - - - - 3.60.5-
ine 3 00 3
A
Charl0.70.4 3,00- - - - - 0.70.4-
ie 0 0 0

Brown
A

S1570.6 963,- 27.0.68 42.0.6 88.0.5-
ub-to.7 1 000 0 7 2 1 9
tal

TOTAL2860.50.01,6440964.0.630.098.0.50.01240.50.0
.8 7 4 7,00,001 5 0 5 5 .8 7 4
0 0
A This information was prepared and first disclosed under the JORC Code 2004 Edition. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. All other resources classified and reported in accordance with JORC Code 2012 edition.
Note:Tonnages are dry metric tonnes and have been rounded, hence small differences may be present in the totals.
See ASX release of 23 October 2007 and 26 July 2011 (Longamundi, Great Southern, Caroline and Charlie Brown), 23 April 2012 (Bedford, Ivy Ann and Lady Clayre), 03 July 2012 (Blackard and Scanlan) and 22 August 2012 (Legend) for full details of resource estimation methodology and attributions.
Little Eva is reported above a 0.2% copper lower cut-off grade, all other deposits are above 0.3% lower copper cut-off grade

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Datum: 26.06.2015 - 08:47 Uhr
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