Polymetals Resources Ltd (ASX:POL) has entered into a non-binding Memorandum of Understanding (MoU) with Ocean Partners UK Ltd for the replacement of the Endeavor Mine environmental rehabilitation bond - the final condition in the completion of the acquisition of Endeavor lead-silver-zinc mine in the prolific Cobar Basin of New South Wales.
The purpose of the MoU is to negotiate the commercial details for an agreement towards bond replacement by providing a $28 million bond surety for up to four years.
Polymetals' key consideration in the deal structuring with Ocean Partners is to complete the mine restart study (MRS) to pre-feasibility study level to ensure that positive economics can be achieved.
Subject to the mine restart study success, the first concentrate shipment is targeted early in the second half of 2024.
Best chance to be brought back online
Polymetals executive chairman Dave Sproule said: “The support shown by Ocean Partners via the pre-payment 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.”
Bond replacement
Ocean Partners recently provided a A$15 million concentrate pre-payment facility to Polymetals which also included a $500,000 equity contribution to the June 2023 capital raising.
The long-term relationship with Ocean Partners and their confidence in the Endeavor opportunity has been extended to their assistance to work toward finalising commercial terms with the company to replace the bond.
Following a positive MRS outcome, Ocean Partners has proposed to facilitate bond replacement by providing a surety to Polymetals for up to four years.
Bond replacement facilitates completion of the Endeavor Mine acquisition with full title of all assets transferred to Cobar Metals, which include the mining leases, fully permitted underground mine, 1.2 million tonnes per annum concentrator, rail, secure water, grid power, 42 houses and four blocks of units in the Cobar township, and 1,100 square metres of contiguous exploration tenements.
Endeavor delivery
Polymetals acquired 100% of Cobar Metals Pty Ltd via a share transaction ratified by shareholders at a general meeting held on May 12, 2023.
As a wholly owned subsidiary, Cobar Metals retains the right to acquire the Endeavor zinc–silver–lead mine including associated significant infrastructure and 1,100 square kilometres of exploration tenements.
Completion of the acquisition requires that the company replace the bond by April 30, 2024.