The Management Board of KGHM Polska Miedź S.A. announces that on 12 October 2010 the Company signed a Joint Venture Shareholders Agreement with Abacus Mining & Exploration Corporation („Abacus”) with its registered head office in Vancouver, regarding entrance to a joint venture company under the name KGHM Ajax Mining Incorporated to advance the Afton-Ajax copper-gold ore mining project in Canada.
The above-mentioned Agreement is a result of the Investment Agreement signed by KGHM Polska Miedź S.A. and Abacus on 4 May 2010 (current reports 15/2010 and 28/2010).
Further to the Joint Venture Shareholders Agreement, KGHM Polska Miedź S.A. has acquired a 51% interest in the joint venture company KGHM Ajax Mining Inc. formed together with Abacus through a cash contribution in the amount of USD 37 000 000 (the equivalent of PLN 106 567 400 pursuant to the National Bank of Poland exchange rate for USD/PLN of 12 October 2010). Abacus has brought to the joint venture all the rights it owns to the Afton-Ajax deposit and in the Afton region. The cash will be used to carry out a Bankable Feasibility Study and for further exploration.
In accordance with the Joint Venture Shareholders Agreement, KGHM Polska Miedź S.A. holds the option to acquire a further 29% in KGHM Ajax Mining Inc., for an amount not higher than USD 35 000 000 (the equivalent of PLN 100 807 000 pursuant to the National Bank of Poland exchange rate for USD/PLN of 12 October 2010). Execution of this option will be possible following completion of the Bankable Feasibility Study.
The Agreement also includes a commitment by KGHM Polska Miedź S.A. to arrange financing for the project capex. The commitment will arise at the moment of execution by KGHM of the option to acquire a further 29% in KGHM Ajax Mining Inc.
In accordance with the Technical report by Wardrop Engineering Inc. dated 29 July 2009, the project assumes annual copper production at the level of 50 thousand tonnes, and gold production at the level of 100 thousand troz. A 23-year mine-life is predicted.
Legal basis: art. 56 sec. 5 of the Act dated 29 July 2005 on public offerings and conditions governing the introduction of financial instruments to organised trading, and on public companies (Journal of Laws from 2005 No. 184, item 1539 with subsequent amendments)
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