Altona Mining Ltd.

Advancing the SRIG Transaction

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[Translate to Englisch:] Little Eva-Mount Roseby Übersichtskarte


 

ABOUT ALTONA

 

Altona Mining Limited (ASX: AOH) is a cashed up ASX listed company with a record of shareholder returns. It is focussed on the Cloncurry Project in Queensland, Australia.

 

The Cloncurry Copper Project has resources containing some 1.65Mt of copper and 0.41Moz of gold. The first development envisaged is the 7Mtpa Little Eva open pit copper-gold mine and concentrator.

 

Major permits are in place with proposed annual production of 38,800t of copper and 17,200oz of gold for a minimum of 11 years. A Definitive Feasibility Study was published in March 2014.  

 

Altona has completed a Framework Agreement with Sichuan Railway Investment Group to fully fund and develop Little Eva.

 

Key metrics as at 31/12/2015:

 

Shares on issue:        534,800,592

Share rights on issue:    4,105,000

Cash:                                A$43.6M

Share price:                      11 cents

Market capitalisation:         A$59M

 

Altona Mining Limited

ACN: 090 468 018

Ground Floor, 1 Altona Street

West Perth Western Australia 6005

 

T:  +61 8 9485 2929

E:  altona@altonamining.com

W: www.altonamining.com

 

ASX:                                        AOH

Frankfurt:                                  A20

 

Advancing the SRIG Transaction

 

·       SRIG Transaction: Altona and Sichuan Railway Investment Group (“SRIG”) have agreed, subject to conditions, to form a joint venture such that SRIG will contribute US$214 million (A$301 million*) cash to the Cloncurry Project.

 

·       SRIG due diligence well advanced: SRIG have completed a further site visit, meetings with government and due diligence consultants in Brisbane and confirmatory drilling at Little Eva. The drilling confirmed the geological model where the two holes were drilled. Confirmatory metallurgy is underway. SRIG is targeting completion of its due diligence by the end of February 2016.

 

·       Documentation in progress: The parties have advanced negotiations on the Subscription, Shareholder and Management Agreements and are targeting execution in March 2016. Regulatory approvals will follow.

 

·       Agreed work programme in progress: The parties agreed a work programme whilst due diligence and regulatory approvals are completed. Diamond drilling has been completed at Turkey Creek, Little Eva and Bedford to obtain metallurgical sample.

 

·       Mine life expansion: Approximately two years of additional mine life can be delivered from an optimised pit at Turkey Creek. Mine and infrastructure design and planning has been undertaken to integrate Turkey Creek into the project and support an amendment to the Environmental Authority for the project.

 

·       Roseby South Project:  The 475km2 100% owned Roseby South Project immediately adjoins the Cloncurry Project. Field reconnaissance of new targets was completed in preparation for exploration in 2016.

 

·       Tenement Consolidation: 18 mature Exploration Permits (EPMs) at the Cloncurry and Roseby South Project were replaced with 4 new permits this quarter.

 

·      Cash Balance: At 31 December 2015 Altona’s cash balance was A$43.6 million.

 

* Assumes AUD:USD of 0.71.

 

 

ASX Releases

 

Altona lodged 14 ASX releases relating to its activities since the last Quarterly Report.  These announcements provide a more detailed description of activities than this report.

 

21-12-2015

Employee Award Plan Prospectus

16-12-2015

Update on SRIG - Altona Transaction

27-11-2015

Resignation of Peter Ingram

26-11-2015

Results of 2015 Annual General Meeting

24-11-2015

Investor Presentation

20-11-2015

Ceasing to be a substantial holder

18-11-2015

Appendix 3Y

18-11-2015

Amendment to Terms of AGM Resolution 2

04-11-2015

Becoming a substantial holder

03-11-2015

Becoming a substantial holder from MS

28-10-2015

Becoming a substantial holder

23-10-2015

2015 Annual General Meeting

12-10-2015

Appendix 3B

 

 

 

 

 

SRIG Joint Venture

 

 

Major joint venture announced

 

Altona concluded a binding Framework Agreement with SRIG on 26 June 2015. The agreement is subject to certain conditions.

 

 

 

 

The parties have agreed to establish an incorporated joint venture holding Altona’s Cloncurry Project located in north-west Queensland, with SRIG to contribute cash of US$214.46 million and to 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.

 

 

Project will be fully funded

 

The cash to be contributed by the joint venture partners of US$252.46 million equates to A$355.6 million at an exchange rate of AUD:USD 0.71 and will exceed the estimated capital cost (A$294 million) for the Little Eva mine and provide a substantial allowance for working capital and overruns.

 

 

 

 

The transaction values the Cloncurry Project on a pre-cash contribution basis at US$105 million.

 

 

US$2 million deposit paid

 

Altona received a Performance Guarantee from the Bank of China that affirms the US$2 million deposit required under the Framework Agreement with SRIG has been deposited and is reserved for payment to Altona in the event of default by SRIG.

 

 

Due diligence underway

 

As per the Framework Agreement, SRIG is now undertaking the formal due diligence required by Chinese authorities. This included the drilling of two diamond drillholes at Little Eva to confirm the resource estimate and permit confirmatory metallurgical testwork. The drilling was completed in November 2015 and metallurgical testwork is underway.

 

SRIG executives also completed further site visits and meetings in Brisbane with technical, commercial and legal due diligence consultants. SRIG also met with the Queensland State Government.

In parallel with the due diligence the parties are finalising formal documentation comprising Subscription, Shareholder and Management Agreements. The key points of these documents have been agreed and are contained within the Framework Agreement. The parties are targeting the execution of the formal agreements in March 2016.

 

On completion of the due diligence and execution of the formal agreements, SRIG will proceed to seek approvals from the Chinese (SASAC of the Sichuan Province) and Australian (FIRB) regulatory authorities. This process may take up to three months to complete.

 

 


 

 

About SRIG

 

 

SRIG is a financially robust partner

 

SRIG was established in 2009, is based in Chengdu in south-western China and is 100% owned by the Sichuan provincial government. The group’s 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.

 

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

 

 

 

 

Corporate

 

 

Altona maintains a strong cash balance

 

Altona had A$43.6 million of funds on deposit at 31 December 2015. This provides Altona with a strong cash position to underpin the SRIG transaction.

 

Cash movements for the quarter are tabulated below:

 

 

A$ (millions)

Opening cash (1 October 2015)

45.0

Exploration and evaluation

(0.7)

Corporate including SRIG transaction costs

(0.9)

Interest received and other

0.2

Closing cash (30 December 2015)

43.6

 

The principal assets of the Company are mining licences and tenements located in the Cloncurry area of Queensland.  Contained within these interests is the Cloncurry Project.

 

 

Company focus on delivering the Cloncurry Project

 

Altona has reduced its Board to three Non-Executive Directors and the Managing Director effective from the Annual General Meeting held on 26 November 2015. Altona is utilising part-time contractors to assist with managing the agreed SRIG work programme and assisting with SRIG’s due diligence. Altona strives to retain the expertise to conclude the SRIG transaction, manage the Cloncurry asset and maintain the public company at minimum cost.

 

 

During the quarter, the process of winding up Altona’s wholly owned Finnish subsidiary, Vulcan Kotalahti Oy, neared completion.  Boliden retains an option over the assets held by the other Finnish subsidiary company still held by Altona.

 

Share Price Activity on ASX

 

Quarter open                              8.5¢

High                                         12.0¢

Low                                            8.0¢

Quarter close                           11.0¢

Average daily volume          287,456

 

 



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