Anaconda Mining Inc. ("Anaconda" or "the Company") - is pleased to announce that, pursuant to the stock purchase agreement dated December 7, 2011 ("SPA"), between Inversiones La Veta SpA ("La Veta"), a wholly owned subsidiary of Anaconda, and Hierro Tal Tal S.A. ("Tal Tal"), Tal Tal has achieved commercial production on its first producing iron ore property and made its first shipment of iron ore concentrate on August 10, 2013.
Per the payment terms of the SPA relating to the commercial production milestones, Tal Tal shall pay La Veta US$1 million on or before September 9, 2013.
La Veta will also begin to receive a gross sales royalty of 0.80% on a calendar quarterly basis on the sale of iron ore concentrate from the first producing iron ore property. The first shipment that departed in early August contained 163,582 dry metric tonnes of iron ore concentrate grading 63.5% iron (certified by SGS). The total estimated royalty payment for this shipment is expected to be approximately US$125,000 and will be payable on or before October 15, 2013.
President and CEO of Anaconda, Dustin Angelo, stated, "Anaconda would like to congratulate Tal Tal on achieving the commercial production milestone and making its first shipment. The transaction has been mutually beneficial for both parties. For Anaconda, the cash generated from the transaction can be reinvested in its core gold mining business to assist with the Company's growth objectives."
Overview of lump sum payments from the transaction:
Anaconda's wholly owned subsidiary, La Veta, sold its shares representing a 50% ownership stake in Minera Hierro San Gabriel S.A. ("MHSG") and a 20% ownership stake in Inversiones Hierro Antofagasta S.A. ("IHA") to Tal Tal for up to US$11 million in cash payments, of which US$2 million was paid at closing and an additional US$2 million was paid on May 30, 2012. Now that commercial production has been achieved, La Veta will receive an additional US$3 million, of which the first US$1 million shall be paid on or before September 9, 2013. The remaining US$2 million is due the earlier of (1) 30 days after the first shipment from the second producing iron ore property and (2) two years from the anniversary date when Tal Tal achieved commercial production from the first producing iron ore property. Furthermore, La Veta can earn up to another US$4 million based on the sales price realized for certain volumes of production from the properties, as defined in the SPA.
Source: http://www.anacondamining.com/