Copper Mountain Mining Corporation CMMC (the "Company" or "Copper Mountain") is pleased to announce it has closed the previously announced sale of its wholly-owned Eva Copper Project and its 2,100 km2 exploration land package in Queensland, Australia for total consideration of up to US$230 million (the "Transaction") to Harmony Gold Mining Company Limited HAR HMY ("Harmony").
Under the Transaction agreement, Copper Mountain was entitled to receive gross upfront cash consideration of US$170,000,000 on closing as well as contingent consideration comprised of the following:
A. Up to US$30,000,000 in cash, based on a contingent payment arrangement where Harmony will pay Copper Mountain 10% of the incremental revenue generated from the Eva Copper Project and the Australian exploration land package above the revenue assuming a US$3.80/lb copper price; and
B. Up to US$30,000,000 in cash, based on a contingent payment arrangement where Harmony will pay Copper Mountain US$0.03 per pound of contained copper for any SAMREC copper resource discovered and declared on a new deposit within the Eva Copper Project and the Australian exploration land package after the closing of the Transaction.
Net of withholding taxes and certain purchase price adjustments, the Company received net proceeds of approximately US$129 million. The gross proceeds from the Transaction are subject to applicable capital gains taxes. The cash proceeds will be used to cover transaction fees, including advisory fees in relation to the Transaction and bondholder consent process, amendment fees required in connection with such bondholder consent (collectively, "Transaction Fees"), and to repurchase up to US$87,000,000 principal amount of the Company's US$250 million senior secured bonds (the "Bonds") at an offer price of 103% of the nominal amount (plus accrued interest) under the bond buyback offer agreed with bondholders in consideration for their consent to the Transaction (the terms of which were previously announced in Copper Mountain's press release dated November 28, 2022) (the "Bond Buyback"), and for working capital purposes. The Company is required to make the Bond Buyback offer within thirty (30) days after completion of the Transaction.
The net cash proceeds from any future contingent payments received by the Company from Harmony pursuant to the Transaction before the maturity date of the Company's Bonds on April 9, 2026 will be applied to either: (i) make offers to buyback Bonds at an offered price of 103% of the nominal amount of the Bonds (plus accrued interest on the repurchased amount) if such contingent consideration is received prior to the applicable interest payment date in April 2024; or (ii) redeem Bonds in accordance with the call terms of the Bonds if such contingent consideration is received on or after the applicable interest payment date in April 2024.
Liquidity and Capital Resources Update
As at the closing of the Transaction and after payment of Transaction Fees and completion of the Bond Buyback, the Company is estimated to have approximately C$71 million in cash and cash equivalents, plus restricted cash of C$7.1 million, as compared to C$32.4 million as at September 30, 2022, plus C$17.2 million in restricted cash. The ability of the Company to meet its future cash commitments and working capital obligations, and to satisfy its Bond covenants, is dependent upon a number of factors, including the Company's continued ability to generate positive cash flow from the Copper Mountain mine.
Actual cash flow for the Copper Mountain mine may vary from projections depending on various assumptions concerning the operations and capital expenditure plans of the Company following completion of the Transaction, commodity prices, and general economic, market or business conditions. If cash flows are insufficient to satisfy the Company's cash obligations, Bond covenants and Bond servicing costs going forward, the Company will pursue other options to meet its future capital needs.
Source: https://cumtn.com/