Aditya Birla Minerals sells Mount Gordon copper ops for $10.74 mn

Cash transaction completion expected by Oct 31, 2015

Aditya Birla Minerals, subsidiary of Hindalco Industries, today said it has sold its Mount Gordon copper operations in Australia to Lighthouse Minerals Holdings for a cash payment of up to A$15 million ($10.74 million).

The transaction is currently expected to complete by 31 October 2015.

Under a binding share purchase agreement signed between the parties, upon completion of transaction, Lighthouse Minerals Holdings will acquire all shares of Birla Mt Gordon for a cash payment of A$5 million ($3.58 million), said Aditya Birla Minerals in a release today.

Birla Mt Gordon is a wholly-owned subsidiary of Aditya Birla Minerals.

Also, another cash payment of A$10 million ($7.16 million) to Aditya Birla Minerals is payable if the three-month delivery quoted price for copper on the London Metals Exchange averages at least A$4.20 per pound ($3 per pound) over any continuous six month period, during the period commencing on 12 months after the date of first commercial production at Mt Gordon (under the Buyer's ownership) and ending 36 months after the date of first commercial production at Mt Gordon, said the release.

Apart from the cash payment, the transaction also includes, reimbursing Aditya Birla Minerals for actual care and maintenance expenses incurred by arm Birla Mt Gordon for the period commencing on the execution date of the agreement and ending on the completion date of the transaction for up to a maximum amount of A$500,000 per month, it said.

The Mount Gordon mine is set up to produce copper in concentrate at an annualized rate of approximately 1.4 million tonne per annum of ore processing.

The agreement also mentions replacement of all financial assurance bonds (environmental as well as performance bonds) in relation to Mount Gordon, amounting to about A$41.7 million.

Post transaction, approximately A$41.7 million of encumbered cash balance of Aditya Birla Minerals will become unencumbered, the company informed. Together with the cash proceeds from the sale of Birla Mt Gordon, this increase in the company's unencumbered cash balance will provide the Aditya Birla Minerals board with considerable flexibility, it said.

The transaction will also need Lighthouse Minerals Holdings to obtain Foreign Investment Review Board approval and Aditya Birla Minerals procuring the discharge of all inter-company indebtedness between itself and Birla Mt Gordon before completion.

The agreement also includes a clause whereby the transaction can be terminated and defaulting party would have to pay a break fee of A$1,000,000 if there is a material adverse change of fundamental terms by any of the parties involved.

Alongside, under Australian Stock Exchange listing rules, the transaction does not require shareholder approval and hence Aditya Birla Minerals is not required to convene a meeting to seek shareholder approval for the transaction, the company said in its release.