ReservoirMinerals Inc. said May 2 that it will pay US$135 million to acquireFreeport-McMoRanInc.'s 55% stake in the Timok copper-gold project upper zone in Serbia, as wellas to increase its stake in the lower zone.
The company exercised its right of for the project withFreeport unit Freeport-McMoRan Exploration Corp.
Reservoir funded the deal through a US$90.3 million equityplacement, and a US$44.7 million bridge loan with under theirdefinitive agreement to combine the companies.
The company has now fully acquired the Timok project upperzone, and will own 60.4% of the Timok project lower zone of the Cukaru Pekideposit after meeting certain development requirements.
In addition to retaining the remaining interest in the lowerzone, Freeport has the option to have any new large mineral deposit containingat least 4 million tonnes of contained copper equivalent characterized in thesame manner as the lower zone by paying twice the drilling, study and othersimilar costs, plus other direct costs such as land acquisition charges, toReservoir.
Until the delivery of a feasibility study, Reservoir willown and fund all of the upper zone development costs, fund C$20 million ofagreed lower zone work and fund 28% of all other lower zone development costs.Reservoir will own 60.4% of the lower zone.
After the delivery of the feasibility study, Reservoir andFreeport will fund 46% and 54%, respectively, of the lower zone development,and each will be entitled to its pro rata share of economic benefits.
Additionally, Reservoir has also entered into a loanagreement with Nevsun for US$850,000, which will be used for immediateoperational expenses at Timok.
Lundin MiningCorp.'s agreement with Freeport-McMoRan, entered in early March, tobuy part of the Timokproject for up to US$262.5 million will be automatically voided as it wasconditional on Reservoir not exercising its right of first offer.