Columbus Copper (CCU.V) has announced it has signed an agreement with First Quantum Minerals (FM.TO, LON:FQM) whereby First Quantum can earn an interest of up to 80% in the company’s Djavolja Varos project in Serbia.
Under the agreement, First Quantum can earn an initial interest of 51% by spending $1M in exploration, of which $100,000 will have to be spent in the first year. An additional 19% interest can be earned if First Quantum spends another $4M in exploration expenditures on the project. The most interesting part of the deal is that Columbus Copper retains a carried interest of 20% towards production, and can repay the 20% of the capex by the cash flow from Djavolja Varos over 15 years.
With this move, Columbus Copper has now three joint ventures, and after talking to the management team, we expect the company to acquire or stake more projects to increase its footprint in the region. Columbus Copper has also received the first payment of $250,000 from its joint venture partner on the Kavaklitepe gold target.
> Click here to read the press release
Disclosure: The author holds a long position in Columbus Copper and no position in First Quantum Minerals. Please see our disclaimer for current positions.
