Copper producer Austral Resources Australia on Tuesday announced a non-binding agreement to buy the Lady Loretta mine and associated exploration tenements from Glencore.

The memorandum of understanding covers the underground Lady Loretta zinc/lead/silver mine located about 150 km north-west of Mount Isa, in Queensland. The transaction, expected to be structured as an acquisition of the Glencore subsidiary operating the mine, would give Austral control of the mining lease and several exploration permits for minerals.

Ore extracted from the Lady Loretta lease would support mining extensions from Austral’s adjacent Lady Annie copper project.

Lady Loretta zinc operations will continue until their scheduled closure in December.

“We are extremely excited with the acquisition of Lady Loretta and the strongly beneficial impact it could have as a part of our long-term copper production profile,” said Austral chairperson David Newling.

“Lady Loretta is an eminently sensible acquisition for us, given its tenements and ours abut, and that it enables a meaningful extension of copper mining from our Lady Annie deposit, which will support production from our Mt Kelly SX-EW processing facility,” he said.

“Lady Loretta, together with our own Mt Kelly processing plant and recently acquired Rocklands project and processing plant from Copper Resources Australia reveal our ambition to consolidate sensible parts of the Mt Isa and Cloncurry copper region,” Newling added.

“We are of the belief that many of the regional assets would strongly profit from the benefits that consolidation can bring, such as blended mining and processing strategies, along with the reduced cost profile that a larger organisation can bring.”

Lady Loretta was originally developed by Xstrata Zinc, with construction starting in 2011. Production commenced in 2013 following Xstrata’s merger with Glencore. Redpath Australia operates the underground mine under contract, extracting about 1.6-million tonnes a year, which is currently hauled to Mount Isa for processing.

Glencore placed Lady Loretta on care and maintenance in 2015 amid low zinc prices. Operations resumed in 2018 as market conditions improved, but the site is now approaching its end-of-life, with declining grades and economic constraints cited for the planned shutdown by year-end.

Terms of the Lady Loretta acquisition are subject to final binding documentation and renewal of the existing mining lease, Austral said.