Summo bids for half-interest in Matrix

Denver — Junior Summo Minerals (SMA-T) has struck a deal with the two largest shareholders of Matrix Metals for the purchase of a 48% stake in the Australian copper producer.

Summo will acquire 40% of Matrix from Murchison United and 8% from Majestic Resources for a total cost of A$5.9 million.

In all, Summo will buy 24.6 million of the 51.2 million shares at a price of A24 per share.

Matrix operates the Mt. Cuthbert open-pit mine in northern Queensland. The heap-leach, solvent-extraction electrowinning operation has four years of reserves remaining at an annual capacity of 5,500 tonnes copper. Cash operating costs for 2001 and 2002 should average below US60 per lb., at current exchange rates.

The transaction follows Summo’s receipt of a bridge financing for US$5.75 million from Resource Capital Fund. The junior has extended A$3.25 million of the loan to Matrix for working capital. In turn, Summo will receive 3 million warrants in Matrix priced at A25 each. If exercised, this would give Summo just over a half-interest in Matrix.

Matrix will use the funds to finance drilling at the newly acquired Mt. Watson property, north of the Mt. Cuthbert mine. Summo President Greg Hahn believes the 100-ha Mt. Watson property has potential for expanding resources at the mine.

Matrix expects to begin drilling in March at the White Range copper project, more than 100 km southeast of Mt. Cuthbert. White Range hosts a measured, indicated and inferred resource of more than 12.6 million tonnes grading 1.2% copper.

Preliminary feasibility work has been completed for an open-pit, heap-leach operation capable of producing 12,000 tonnes of cathode copper per year at an average cash operating cost of less than US55 per lb.

With a possible expansion at Mt. Cuthbert, Matrix could increase its annual output to 20,000 tonnes copper. The transaction has yet to be approved by minority shareholders of Matrix and by regulators.