Aditya Birla Minerals Ltd (ABML) on Monday said it will sell its closed Birla Mt Gordon (BMG) copper mine in Queensland, Australia to Lighthouse Minerals Holdings Pty Ltd for around USD 10.75 million.
BMG is located in northwest Queensland and is set up to produce copper in concentrate at around 1.4 million tonnes per annum. The operation has been put under Care and Maintenance since April 2013.
During a care and maintenance, production is stopped but the mine site is managed to ensure its safety and maintain a stable condition.
The agreement also includes BMG's about 41.7 million Aus dollar (USD 30 million) of financial assurance bonds (environmental bonds and performance bonds), Hindalco, which owns 51 per cent of AMBL, said in a statement.
"ABML is pleased to announce that it has executed a binding agreement for sale of BMG, through a sale to Lighthouse Minerals of 100 per cent of the shares in BMG, a wholly-owned subsidiary of the company. The buyer is owned by an affiliate of EMR Capital Resources Fund and Lighthouse Minerals Pty Ltd," it added.
On the details of the transaction, Hindalco said the deal includes a cash payment of 5 million Australian dollar to ABML payable on completion of the transaction.
"A further cash payment of 10 million Australian dollar to ABML payable if the three-months delivery quoted price for copper on the London Metals Exchange averages at least 4.20 Australian dollar per pound over any continuous 6-month period ...," it added.
The buyer will reimburse ABML for care and maintenance expenses incurred by BMG in relation to Mt Gordon for the period commencing the execution date of the agreement and ending on the completion date of the transaction up to a maximum amount of 5,00,000 Australian dollar per month.
"Replacing all financial assurance bonds (being environmental bonds and performance bonds) in relation to Mt Gordon, amounting to approximately 41.7 million Australian dollar," it added.
On reasons behind the sale, ABML said: "On completion of the transaction, approximately 41.7 Australian dollar million of encumbered cash balance of ABML will become unencumbered," it added.
Together with cash proceeds from the sale of BMG, this increase in the firm's unencumbered cash balance will provide the Board with flexibility while it assesses options for the capital management and ongoing strategic review of the balance of the ABML business, it added.
ABML Managing Director Neel Patnaik said it reflects the efforts undertaken by ABML, BMG and its employees and ANZ Corporate Advisory over the past two and a half years, since BMG was placed under care and maintenance in April 2013 and a strategic review process was started for the operation.
