EuroZinc will pay EDM US$26 million for price-participation rights held by EDM since EuroZinc bought the operation, last June. The rights were dealt to EDM and to the other vendor,
EDM had held 51% of the participation rights interest, which was calculated at 50% of the premium over a base value, multiplied by the quantity of copper produced quarterly. The base value was US$1,984 per tonne (US90 per lb.) in the year after the sale, and increased to US$2,094 (US95 per lb.) in the second, third and fourth years.
Repayments of the loan that financed the buyback are scheduled according to the notional price of the participation rights, but the whole loan, US$48 million, will be repaid in 18 months at most.
Along with the buyout of the royalty, EDM and EuroZinc have entered into an agreement covering the 549-sq.-km land package surrounding Neves Corvo. The agreement gives EDM the option of exercising a 15% working interest in any project EuroZinc brings to the prefeasibility stage.
EuroZinc’s Portuguese subsidiary, Somincor, which holds the land package, also gets access to EDM’s data on the Neves Corvo area. Somincor’s exploration department is modelling the existing data for a regional exploration program, and plans to drill some targets by year-end.
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