Aim-listed Tertiary Minerals’ newly incorporated Zambian subsidiary, Copernicus Minerals, has signed a binding letter of agreement (BLA) with First Quantum Minerals (FQM) on the Mukai copper project, in Zambia.

Copernicus is 90%-owned by Tertiary Minerals (Zambia), which is 96%-owned by Tertiary Minerals.

The BLA grants FQM an initial exploration due diligence period of 24 months during which it is committed to fund a minimum $1.5-million of exploration expenditure, $500 000 of which is to be spent in the first year (Phase 1).

FQM may then choose to earn an initial 51% interest in the Mukai exploration licence by demonstrating a mineral resource containing at least 80 000 t of contained copper metal within a further 24 months (Phase 2); and a further 29% interest by completing a mining study and delivering a notice of intent to mine within a third 24-month period (Phase 3).

FQM must continue sole funding the project until receipt of regulatory and governmental permits for the start of construction of a mining project.

At that point, Copernicus may either participate at a 20% contributing equity level or dilute down towards a minimum of 10%, at which point the participating interest automatically converts to a 1.5% net smelter return (NSR) royalty.

Should FQM continue through all phases of the project, it will make progressive payments to Copernicus totalling up to $2-million over the three 24-month phases of the BLA and subsequent agreements.

The BLA is subject to various conditions precedent including renewal and transfer of the licences from Mwashia Resources to Copernicus, which is currently in progress.

The licence lies adjacent to FQM’s Trident project, which comprises various mining licences encompassing the producing Sentinel copper mine and the recently developed Enterprise nickel mine.

The Sentinel processing plant has a processing capacity of 55-million tonnes of copper ore yearly.

The objective of the proposed joint venture (JV) between FQM and Tertiary is to identify copper (and/or nickel deposits) that can be rapidly developed as additional feed for the Trident plants.

“First Quantum is strongly motivated to find additional ore feed for Sentinel and, at Mukai, we have defined a priority soil anomaly along strike from copper mineralisation already drilled by First Quantum on its adjacent Tirosa prospect,” says FQM executive chairperson Patrick Cheetham.

“If exploration is successful, we stand to benefit from FQM’s $2.1-billion investment in the Trident operations and the JV earn-in terms have been tied to specific mineral resource and mining decision milestones, rather than specific exploration expenditures.

“The bar is set high, consistent with the large size of the Sentinel mining operation and the agreed terms require First Quantum to define a copper resource with an in-ground value of over $700-million at today’s copper price, before it earns any interest in the project,” he adds.

“Evaluating the potential at Mukai is important for the parties and for Zambia, given its proximity to the infrastructure already established at Trident. First Quantum is the natural partner for this undertaking given their unrivalled track record of recognising opportunities, defining resources and developing projects quickly and cost effectively,” Cheetham posits.

Corporate finance, broking and advisory firm SP Angel says Tertiary has secured another exciting agreement with a Zambian mining operator.

“Mukai remains highly prospective, with encouraging but minimal soil sampling results reported to date. First Quantum brings the deep pockets and technical expertise that are invaluable when progressing greenfield exploration,” the firm comments.