Ecora Resources has secured a $50 million streaming deal for the Mimbula copper mine in Zambia, expected to enhance its earnings and cash flow. The agreement supports a significant expansion project aimed at raising copper production, while the company continues to diversify its assets in critical minerals. Ecora will finance this acquisition using cash reserves and debt.
Ecora Resources, a royalty company focused on critical minerals, announced the execution of a $50 million streaming deal for Moxico Resources’ Mimbula copper mine in Zambia. This all-cash agreement covers the mine’s expected 11-year lifespan, dependent on its existing reserves, and presents prospects for extension. CEO Marc Bishop Lafleche noted, “The acquisition will cement copper at the core of our commodity exposure and be immediately accretive to earnings and free cash flow.” Ecora currently operates over 20 royalty and streaming assets, diversifying its portfolio in critical materials including copper, cobalt, and nickel.
The Mimbula project, located in Zambia’s Copperbelt Province near Chingola, commenced production in late 2022. Phase 1 involves the production of high-quality copper cathodes using heap leaching and a solvent extraction/electrowinning (SX/EW) process, achieving a capacity of 10,000 tonnes per annum (tpa). A Phase 2 expansion aims to significantly increase this capacity to 56,000 tpa, with the initial phase expected to be completed by early 2024.
Lafleche remarked on the project’s potential, stating, “Mimbula has everything we look for in an investment; it is a high-quality ore body, with low operating costs, and with an exceptional management team.” As of last year, Mimbula successfully produced 14,000 tonnes of cathodes at operating costs positioned within the lowest range globally. Moxico, which holds a 93% stake, estimates that the final expansion stages will be concluded by early next year.
To further enhance mineral extraction, a Phase 3 expansion is under consideration, potentially involving the construction of a cobalt processing facility, as the project holds 38.6 million tonnes of cobalt resource. Lafleche emphasized that this acquisition boosts Ecora’s copper exposure significantly, projecting that the company’s copper and base metals will comprise approximately 45% and 75% of its net asset value (NAV), respectively.
To finance the streaming deal, Ecora will utilize a blend of existing cash reserves and debt instruments, including $30 million from its revolving credit facility. Lafleche indicated that this structured transaction aims to maximize copper entitlements early in the stream, thereby accelerating earnings growth and assisting in expected debt reduction over the next year to two years.
In conclusion, Ecora Resources has solidified its position in the copper market through a significant $50 million streaming deal for the Mimbula copper mine in Zambia. With ongoing expansion plans and a strong focus on lowering operating costs, the company aims to enhance its profitability and asset value in the long term. This strategic acquisition underscores Ecora’s commitment to increasing its presence in the critical minerals sector.
Original Source: www.mining.com
