On 19 December 2018, mineral exploration company Andromeda Metals Limited (ASX: ADN) made an announcement regarding a joint venture with Environmental Metals Recovery Pty Ltd (EMR) to progress In-Situ Recovery (ISR) of Copper at Moonta tenement.
As per the announcement, Andromeda Metals Limited has agreed to the commercial terms for a binding Earn?In and Joint Venture Agreement with EMR to form the Moonta In?situ recovery (ISR) Joint Venture which will cover the northern part of the company’s 100 percent Moonta tenement.
EMR is an Australian private company which is an associated entity to Environmental Copper Recover SA Pty Ltd that is currently advancing the Kapunda Copper ISR Project. Through this Joint venture, ADN will be able to focus its efforts towards progressing the Poochera Halloysite?Kaolin Project while ISR will work on evaluating the potential for extracting copper at Moonta.
Andromeda Metals believes that In?situ recovery has a potential to be a low environmental impact method of copper extraction with a minimal surface disturbance that is sensitive to and can co?exist with existing landowners.
As per the terms of the Moonta ISR Joint Venture Agreement, after the completion of due diligence activities, EMR will solely fund $2.0 Mn on project related activities across the project area over the 4 years to earn a 51 percent equity interest in the project area. In the first year of the Joint venture, EMR is required to spend a minimum of $200,000 on the project and a further $300,000 in the second year under the Stage 1 Commitment. After the completion of Stage 1 Commitment, EMR will have an option to acquire an additional 24 percent equity interest through the expenditure of an additional $3.5 million over a further 3.5 years.
As per the terms of the agreement, EMR will be acting as manager and operator of the joint venture while it is sole contributing and thereafter while ever it holds majority equity. In future, if Andromeda Metals dilutes to less than 10 percent equity interest in the joint venture, then its interest will revert to a 1.5 percent net smelter return royalty payable with respect to any minerals produced from the project area. ADN will continue to hold 100% ownership to the remaining Moonta tenement, excluding the Moonta Porphyry Joint Venture with Minotaur Exploration in which ADN holds 90 percent equity interest.
At the end of the September quarter, the company was having net cash used in operating activities of $0.412 million, net cash flow from investing activities of $0.3 million and net cash flow from financing activities of $1.025 million. As at 30 September 2018, the company was having net cash and cash equivalent of $1.774 million.
In the last three months, ADN’s shares increased by 16.67 percent as on 17 December 2018. ADN’s shares traded at $0.007 with a market capitalization of circa $7.59 million as on 19 December 2018 (AEST 4:00 PM).
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