RTG Mining’s (ASX:RTG) associate company in the Philippines Mt Labo Exploration & Development Corporation has entered into a strategic partnership with Glencore (LSE:GLEN) for offtake and finance for the development of stage one of the Mabilo Project in the Philippines.
Both companies have entered into a binding term sheet for a financing facility and offtake, and will now proceed to long form documentation.
Under the binding term sheet, a securing financing facility providing up to US$30 million ($47.33 million) will be used for the project development of stage one, as well as working capital requirements.
Tranche one, totalling US$3.5 million, provides early funding flexibility to complete the first stage of the project land acquisition with limited conditions. Tranche two, totalling US$21.5 million, provides for the balance of development of stage one as well as working capital needs.
Meanwhile, tranche three, totalling US$5 million, provides for any additional working capital purposes subject to consent of both parties.
With the acceptance of the term sheet, Mt Labo — owner of the Mabilo Project — will progress to finalising long-form documentation which is expected to be completed within weeks.
RTG, which has a market capitalisation of $21.44 million, says the initial focus will be finalising land acquisition, drawing on the first tranche of the facility, and then securing any necessary tree cutting permits.
Upon completion, Mt Labo will commit to the development schedule and start-up of Mabilo.
RTG Chief Executive Justine Magee says stage one of Mabilo is low-risk with nominal upfront capital and will generate strong cashflow quickly — due to there being no processing required.
“You simply mine the products, crush, and then ship,” Magee says.
“With a reserve grade of 21% copper, demand for the product is strong and it should allow us to internally fund our equity contribution for stage two, which produces a high-grade copper-gold concentrate, and commit to drilling to identify the porphyry source, which could be a game changer for the scale and value of the project.
“We believe this is a key milestone that will clearly demonstrate the value of the Mabilo Project and we are excited to be moving the project through to operations.”
Further, the offtake terms are provided for all stage one products comprising the gold oxide cap, oxide copper-gold skarn, and the supergene chalcocite.
Stage one direct shipping operation will mine, amongst other products, 100,000 tonnes of supergene chalcocite material which runs in the order of 21% reserve grade copper.
Glencore is a global diversified natural resources company and produces more than 60 commodities.
RTG Mining is a dual-listed mineral explorer focused primarily on progressing the Mabilo Project.
Write to Aaliyah Rogan at Mining.com.au
Images: RTG Mining
