Polymetals Resources (ASX:POL) and Ocean Partners UK have entered into a non-binding Memorandum of Understanding (MoU) to potentially replace the Endeavor Mine Environmental Rehabilitation Bond to the amount of $27.96 million.
Following a positive Mine Restart Study (MRS), Ocean Partners has proposed to facilitate a Bond replacement by providing a surety to Polymetals for up to 4 years.
The Bond replacement is the final condition for the completion of Polymetals’ Endeavor Mine acquisition, with full title of all assets transferred to Cobar Metals, Polymetals’ wholly owned subsidiary.
This includes the mining leases, fully permitted underground mine, 1.2mtpa concentrate concentrator, rail, secure water, grid power, 42 houses plus 2 blocks of units in the Cobar township, and 1,100km-square of contiguous exploration tenements.
The Bond replacement MoU follows a $15 million Concentrate Prepayment Facility provided by Ocean Partners to Polymetals. This included a $500,000 equity contribution to the June 2023 capital raising.
Polymetals, which has a market capitalisation of $46.09 million, says its long-term relationship with Ocean Partners has now been extended through its assistance to work towards replacing the bond.
Meanwhile, further to the $15 million Concentrate Prepayment Facility provided by Ocean Partners, Polymetals says it continues to advance discussions with various debt providers to ensure an Endeavor Mine Restart is well funded.
Commenting on the replacement, Polymetals Resources Executive Chairman Dave Sproule says: “The support shown by Ocean Partners via the Prepayment Facility, equity participation and now assistance with the Environmental Bond replacement, is a testament to their confidence in the Polymetals team, the Endeavor Mine, and particularly their outlook for silver, zinc, and lead.
“Our well-established partnership should not be underestimated, as it provides all key elements to give the Endeavor Mine its absolute best chance to be brought back online as a long-term and profitable silver, zinc, and lead producer”
Our well-established partnership should not be underestimated, as it provides all key elements to give the Endeavor Mine its absolute best chance to be brought back online as a long-term and profitable silver, zinc, and lead producer.”
Following a general meeting held on 12 May 2023, Polymetals acquired 100% of Cobar Metals via a share transaction.
As a wholly owned subsidiary, Cobar retains the right to acquire the Endeavor Mine, including associated infrastructure and 1,100km-square of exploration tenements.
However, the completion of the acquisition requires that Polymetals replaces the Bond by 30 April 2024. Polymetals’ key consideration in the deal structuring with Ocean Partners is to complete the MRS to Prefeasibility Study level.
Polymetals says the MRS is well advanced, and the company aims to announce the results in the early December quarter. Subject to a positive MRS result and Bond replacement, Polymetals expects that mine and mill refurbishment works would begin during the December quarter.
On that basis, operational restarting would occur during H1 2024, with first concentrate shipments and cash flow targeting within 3 months of re-commissioning the concentrator.
The Endeavor Mine is located in the Cobar Basin in central-west New South Wales, Australia.
Polymetals Resources is an Australian mining and exploration company focused on precious and base metal resources. As of 30 June 2023, the company had $2.633 million cash and cash equivalents at hand, according to its latest quarterly report published on 19 July 2023.
Images: Polymetals Resources