Abacus Closes Definitive Joint Venture Agreement With KGHM JV Company Incorporated With Abacus as Operator
October 12 2010 - 1:00PM
Marketwired
Abacus Mining & Exploration Corporation ("Abacus" or the
"Company") (TSX VENTURE: AME) announces that the Definitive Joint
Venture Agreement (the "Agreement") with KGHM Polska Miedz S.A.
("KGHM") formally creating a Joint Venture Company has been
finalized and closed. The Joint Venture sets out the parameters for
the development of the Afton-Ajax copper-gold project and
surrounding area near Kamloops, B.C. through bankable feasibility
to production.
Under the terms of the Agreement, which has been approved by the
Boards of Directors of both companies, Abacus and KGHM have entered
into an incorporated joint venture to conduct exploration over the
8,000 hectare property, acquire additional properties within a 5km
area of interest, and engage in development, mining and operation
activities in other prospective global mining regions. Each
shareholder has made an initial contribution to the Joint Venture
Company as follows: Abacus will contribute the property, equipment
and fixtures for a 49% shareholding interest, and KGHM will
contribute a cash payment in the amount of US$37 million for a 51%
shareholding interest in the Joint Venture Company.
The US$37 million initial contribution by KGHM will be deployed
principally to fund a Bankable Feasibility Study ("BFS") on the 503
million tonne copper-gold rich Ajax property as well as exploration
work elsewhere in the Afton camp. The BFS contemplates the
construction of a mine in respect of one or more of the
properties.
A Board of Directors for the Joint Venture Company has been
installed, comprising two nominees of each of Abacus and KGHM with
general responsibility and authority for the management of the
affairs of the Joint Venture Company, and to establish objectives,
policies and strategies relating to the Joint Venture and its
operations. Mr. Marcin Mostowy, KGHM's Risk Manager, will be
appointed CEO of the Joint Venture Company, while Andrew Pooler,
COO of Abacus Mining, will be appointed COO of the Joint Venture
Company.
Abacus shall be the Operator of the Joint Venture until at least
such time as KGHM exercises its additional interest option upon
BFS.
"With the incorporation of the Joint Venture Company and its
adequate funding structure, we can now look forward to leveraging
our combined expertise to develop the Afton-Ajax project through to
BFS and expand the resource to maximize the project's economics,"
remarked Jim Excell, Abacus' President and CEO. "Concurrently, we
intend to immediately present and evaluate other copper-precious
metals situations to the Joint Venture that merit consideration, to
build the future pipeline and create new value opportunities for
our shareholders."
Mr. Herbert Wirth, President of The Management Board of KGHM
added: "KGHM's joint venture with Abacus has all the elements of a
superior growth vehicle and an excellent fit. Abacus has an expert
mining team with a demonstrated track record in the Americas and an
ideally located project with encouraging economics that can now
progress through to production without funding concerns. We believe
this is a good start to other future expansive joint efforts."
The aforenoted Agreement follows an initial investment by KGHM
of C$4.5 million into Abacus by way of private placement which
closed on May 7, 2010. Upon completion of the BFS, KGHM will have
the option within 90 days to acquire an additional 29% interest in
the JV Company, for an aggregate 80% interest, for a total cash
consideration of up to a maximum of US$35 million. Upon exercising
this additional interest option, KGHM will arrange financing for
its attributable share (80%) of project capital expenditures, and
will offer to arrange financing for Abacus' attributable share
(20%) of project capital expenditures. Abacus is not obligated to
have KGHM make such arrangements on its behalf, and may obtain
financing from third party sources.
On June 23, 2010, Abacus previously announced that shareholders
of the Corporation overwhelmingly approved the Joint Venture
transaction with KGHM Polska Miedz S.A. at a Special Meeting of
Shareholders. The Agreement with KGHM accelerates and largely
de-risks the Afton-Ajax project through BFS and initial production
while also providing the opportunity to build additional value for
both companies by leveraging their respective strengths in pursuit
of other exceptional opportunities in Canada and elsewhere.
On Behalf of the Board,
ABACUS MINING AND EXPLORATION CORPORATION
James D. Excell, President and Chief Executive Officer
Tom McKeever, Executive Chairman
About Abacus
Abacus is an exploration and mine development company with a
43-101 compliant positive preliminary economic assessment report
(announced June 22, 2009) for its Ajax copper/gold project located
10 kms southwest of Kamloops, British Columbia. The report
contemplates a 60,000 tonne per day operation producing an average
of approximately 110 million pounds of copper (approx. 50,000
tonnes) and 100,000 ounces of gold in concentrate annually.
Sensitivity analyses approximating metal prices (US$3.00 per pound
copper and US$1,000 per ounce gold) in the assessment indicate a
NPV of $1.46 billion discounted 8% over a 23 year mine life, with
an IRR of 35.4%, cash costs of $0.90 per pound copper, and payback
of 2.0 years. The Ajax extension remains open along strike and at
depth. Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
Forward-Looking Information
This release includes certain statements that may be deemed
"forward-looking statements". All statements in this release, other
than statements of historical facts, that address events or
developments that Abacus Mining and Exploration Corp. (the
"Company") expects to occur, are forward-looking statements.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "plans", "anticipates", "believes", "intends",
"estimates", "projects", "potential" and similar expressions, or
that events or conditions "will", "would", "may", "could" or
"should" occur. Although the Company believes the expectations
expressed in such forward-looking statements are based on
reasonable assumptions, such statements are not guarantees of
future performance and actual results may differ materially from
those in the forward-looking statements. Factors that could cause
the actual results to differ materially from those in
forward-looking statements include market prices, exploitation and
exploration successes, and continued availability of capital and
financing, and general economic, market or business conditions.
Investors are cautioned that any such statements are not guarantees
of future performance and actual results or developments may differ
materially from those projected in the forward-looking statements.
Forward-looking statements are based on the beliefs, estimates and
opinions of the Company's management on the date the statements are
made. Except as required by applicable securities laws, the Company
undertakes no obligation to update these forward-looking statements
in the event that management's beliefs, estimates or opinions, or
other factors, should change.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Abacus Mining and Exploration Corporation Donna
Yoshimatsu Director of Investor Relations dyoshimatsu@amemining.com
Abacus Mining and Exploration Corporation Tim Mikula Investor
Relations 866-834-0301 or 604-682-0301 604-682-0307 (FAX)
tmikula@amemining.com www.amemining.com
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