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Blackthorn Resources To Sell Equity Interest In Perkoa To Glencore Xstrata For US$10M

Blackthorn Resources' (ASX:BTR) shares should trade higher after agreeing to sell its remaining 27.3% stake in the Perkoa Project in Burkina Faso for $10 million to Glencore Xstrata (LON:GLEN).

The agreement also includes the sale of Blackthorn Resources' exploration licences in Burkina Faso for up to a further US2 million for exploration expenditure incurred.

As a result, Blackthorn will not be required to pay its US$9M share of the US$30M working capital requirement for Perkoa that was announced in August 2013.

Blackthorn is now in a solid financial position to focus on the development of its core asset, the Kitumba Copper Project in Zambia.

The net effect is that it neatly enables Blackthorn to focus on the development of its core asset, the Kitumba Copper Project in Zambia.

Chief executive officer, Mark Mitchell said:

"We are very pleased with the settlement agreed with our partners Glencore Xstrata for the Perkoa Project, and while we are disappointed to end our association with the project, this settlement provides significant capital for Blackthorn Resources to move forward with, and will allow all parties to focus on the future.

"Our immediate focus remains on progressing the development of the Kitumba Copper Project in Zambia, which will continue with the benefit of the additional funds provided by the Perkoa settlement. Also, beyond Kitumba, we now have the means to consider new opportunities."

Structuring of definitive agreements to achieve a final and binding settlement is underway. Blackthorn will seek shareholder approval for this transaction and will convene an extraordinary general meeting as soon as possible
following execution of the definitive agreements.


Blackthorn has recently increased its resource base at Kitumba by 25% to 34.7 million tonnes, grading 2.29% copper at a 1% cut-off.

This includes a Measured Resource of 10.4Mt at 2.93%, or 306,000 tonnes of contained copper.

Kitumba is currently envisaged as an underground operation targeting the high-grade core of the deposit, with an 11 year mine life based on 33 million tonnes of mineable ore with 572,000 tonnes of contained copper.

The PFS has estimated Life of mine average C1 cash costs of US$2.04 per pound of copper, and post-tax Internal Rate of Return of 12.7% using a US$3.50 per pound of copper price.

Estimated NPV is US$108 million, with an annual average EBITDA of about US$105 million once the project is at full production.

Project development costs are forecast at US$358 million, including a US$34.2 million contingency.

Given Kitumba's inherent value, and Blackthorn's robust bank balance, there is plenty of potential upside for the company's present $26 million valuation.

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