Summo eyes Australian copper producer

Denver — Denver-based Summo Minerals (SMA-T) is in negotiations to acquire an equity interest in Australia-based Matrix Metals.

Matrix operates the Mt. Cuthbert copper mine in northwestern Queensland.

Summo, which could not be reached for comment, appears to be targeting the 40.2% stake in Matrix held by Murchison United, which sold the open-pit mine to Matrix in July 2000. Summo is also eyeing the 7.8% interest held by Majestic Resources, which sold the White Range development project to Matrix.

To arrange the acquisition, Summo has entered into a US$5.75-million bridge financing with its major shareholder, Resource Capital Fund (RCF), which holds a 48% interest in the junior. The term of the transaction is 12 months, with an interest of 3% above the London Inter-Bank Offer Rate. The interest can be paid in cash or shares.

If Summo can raise $3 million in equity, RCF will convert US$1.5 million of the bridge facility into equity at the same terms as the $3-million in equity.

As part of the bridge facility, Summo will grant RCF 2 million warrants exercisable at US20 per share.

Matrix’s plans for Mt. Cuthbert includes increasing daily throughput to 8,000 tonnes from 5,500 tonnes.

With the nearby White Range project, the company expects to boost annual cathode copper production to 20,000 tonnes by 2002.

White Range, situated southeast of Mt. Isa, contains a resource of 12.6 million tonnes grading 1.2% copper.