ASX-listed base metals company Blackthorn Resources‘ joint venture partner Glencore International is providing an additional US$80 million in equity funding to complete construction and commissioning of the Perkoa zinc project in Burkina Faso and fund projected costs until the project becomes self-funding.The project is expected to become operating cash positive during Q4, CY2013. Instead of contributing up to US$35 million to maintain its 39.9% interest in the project, Blackthorn Resources has opted for a strategic sell-down/dilution of its interest by 12.6% to 27.3%2. The equity funding amount is in addition to another Glencore funding package announced earlier this year, totalling US$140 million which comprises US$50 million in direct project equity from Glencore, US$70 million in two project loans provided by Glencore and US$20 million working capital facility provided or arranged by Glencore. The additional funding of up to US$80 million represents approximately US$40 million to cover increased construction and commissioning costs and US$40 million to cover working capital and additional capital requirements up to 31 December 2013. Blackthorn believes the agreement reached with Glencore provides the company with multiple benefits. It does not need to raise capital for the project enabling it to preserve cash from its 2012 capital raising, which had been undertaken to progress the 100% owned world-class Mumbwa copper project in Zambia.
“We are extremely pleased to have reached this position with our joint venture partner Glencore in a prompt and commercial fashion. Over the past year and a half, the exploration success we have enjoyed at the Mumbwa copper project has resulted in Mumbwa becoming Blackthorn Resources‘ flagship asset. The capital raising we undertook last year was designed to allow us to accelerate our study work and on-going exploration around this exciting copper project. The commercial outcome we have reached with Glencore will allow us to continue developing Mumbwa while maintaining a meaningful equity position in Perkoa,” says Blackthorn MD, Scott Lowe.Commissioning of the Perkoa process plant continued through February, with improvements in both the throughput into the plant and the quality of the concentrate being produced. Mining in the open pit continues, with work on the second push-back about to commence. Zinc grades being mined from the open pit are better than originally expected. Development of the underground is also progressing well, with the decline now advancing towards the 250 m level. Development drives are being advanced in the 100, 130 and 160 m levels, with ore mined supplementing the production from the open pit. The second ball mill is expected on site in April 2013 with installation and commissioning to be completed in June, enabling ramp up to 1.0 Mt throughput capacity.