SYDNEY: Cooper Metals Ltd. said Monday it has entered a binding share sale agreement to acquire an 85% interest in the Colet Copper Project on Negros Island in the Philippines, a site with a historical estimate of 1.19 million metric tons of contained copper.

The ASX-listed explorer said the project, previously known as the Seminco or Hinoba-an Copper Project, has seen more than 124,000 meters of drilling since its discovery in the late 1960s. A comprehensive technical study was completed in 2012 by AMEC Minproc, now part of Wood Group, evaluating a potential conventional open pit and flotation operation.

The historical estimate, reported in 2012 under the JORC Code 2004, covers 339 million metric tons grading 0.35% copper at a 0.2% cut-off grade across the Don Jose and A1 porphyry copper deposits. Cooper cautioned that the estimate has not been independently validated and does not conform to the JORC Code 2012. A competent person has not done sufficient work to classify it as a mineral resource under current standards, the company said.

“This is an exciting opportunity for Cooper,” Executive Director Tim Armstrong said. “Previous operators completed more than 124,000 meters of drilling across the Don Jose and A1 deposits, with a comprehensive technical study also being completed in 2012. That body of work gives us a strong starting point.”

Armstrong said initial work will focus on validating historical data, with drilling planned for early next year and the aim of reporting a mineral resource under the JORC Code 2012. He noted potential to extend known copper mineralization and explore for gold within the project area.

“At a time when copper supply is tightening and new discoveries and approvals lag, it is our view that assets like this are becoming increasingly scarce and are of strategic value,” Armstrong said.

Transaction Structure

Under the agreement, Cooper will issue 82.2 million fully paid ordinary shares to Chalterra Pty Ltd. shareholders and 45 million performance rights that convert into shares upon delineation of a JORC 2012-compliant mineral resource exceeding 500,000 metric tons of contained copper. The Chalterra shareholders will retain a 15% interest, free carried until Cooper declares a positive final investment decision.

The agreement includes a 1.5% net smelter return royalty, with Cooper holding the right to buy back 0.75% for 3 million Australian dollars ($1.9 million).

Cooper will assume staged payment obligations to Colet Mining shareholders, including $250,000 in December 2026, $250,000 in April 2027, $10 million on exercise of the option to acquire 100% of Colet Mining, and $4 million 24 months after final investment decision or upon declaration of commercial production. Four annual production payments of $4 million each would follow, with a $5 million payment in year five.

One of Cooper’s directors, Michael Frayne, is a beneficiary of a major Chalterra shareholder, making the transaction a related-party deal requiring shareholder approval under ASX Listing Rules 10.1 and 10.11.

Capital Raising

Cooper said it has received firm commitments for a placement of 28.7 million shares to raise approximately $2.16 million at $0.075 per share, a roughly 24% discount to the 15-day volume-weighted average price. The company is also launching a fully underwritten 1-for-4 non-renounceable entitlement issue of 35.9 million shares to raise a further $2.7 million.

The company will issue one free attaching option for every four shares subscribed, exercisable at $0.15 and expiring three years from issue. Directors intend to take up their full entitlements.

Veritas Securities and Prenzler Group have been appointed lead managers to the placement, with Veritas underwriting the entitlement issue. Subject to shareholder approval, Veritas will receive 6 million fully paid ordinary shares subject to 12-month voluntary escrow, 6 million options on the same terms, and a 6% fee on funds raised under the entitlement issue. Veritas and Prenzler will receive a 6% fee on placement funds and 4 million options.

Both current substantial shareholders Ilwella Pty Ltd. and AIC Mines Limited, representing approximately 20% of issued capital, intend to vote in favor of the transaction.

Project Details and History

The Colet Copper Project lies within Mineral Production Sharing Agreement MPSA 217-2005-VI, covering approximately 2,965 hectares, granted in August 2005 for 25 years with eligibility for a further 25-year renewal. Part of the A1 deposit extends outside the MPSA into ground covered by a pending exploration permit application lodged by Chalterra.

The deposits are hosted mainly by quartz diorite of the Pagatban Intrusive Complex, occurring as disseminated and fracture-controlled chalcopyrite with abundant pyrite in stacked, shallowly dipping zones. Don Jose is approximately 2,800 meters long and up to 450 meters wide; A1 is approximately 1,200 meters long and 175 meters wide, defined to about 350 meters below surface.

Exploration upside identified in historical reports includes mineralization open to the south, steepening at depth at A1, and additional copper prospects A2 and Luz identified from soil geochemistry and induced polarization surveys. Historical drilling also tested for gold on the eastern flank of Don Jose, with Mining Associates interpreting gold mineralization to lie on the same regional structure as Philex Mining’s Bulawan gold mine.

Risks and Conditions

Cooper noted several matters relevant to the reliability of the historical estimate, including that original assay certificates, logs and core are not available for drilling completed before 1995, quality control data for historical drilling was not audited, and historical collar locations were recorded in several survey datums with only some validated. Approximately 17.6 million metric tons at 0.25% copper of the A1 deposit lies outside the MPSA in an area subject to Chalterra’s pending exploration permit application.

The economic assumptions used for the historical estimate, including a copper price of $2.50 per pound and 2010 mining and processing costs, are not current, the company said.

To report a mineral resource under JORC 2012, Cooper will need to recover and validate the drillhole database, verify historical collar locations and survey datums, complete check assaying including at an umpire laboratory, conduct confirmation and twin drilling, review bulk density, confirm tenure over the full extent of mineralization, and complete a new estimate. The company intends to spend approximately $3 million on the work program over the next 12 months.

The transaction remains subject to customary conditions including due diligence, regulatory approvals and shareholder approval at a general meeting yet to be scheduled. There is no certainty the conditions will be satisfied or that the transaction will complete, Cooper said.

The project is located approximately 20 kilometers by road from the coastal town of Hinoba-an and 25 kilometers from Sipalay City, with a national grid substation about 25 kilometers away. An environmental baseline study was completed in 2011 and 2012.

Cooper’s existing portfolio includes the Mt Isa East Copper-Gold Project in Queensland, the Gorooro Copper-Gold Project in Western Australia, and the Pyramid Gold Project in Queensland.