Cooper Metals Acquires 85% of Chalterra, Holder of Colet Copper Project
Key Takeaways
- Cooper Metals is acquiring 85% of Chalterra, which holds an option over 100% of the Colet Copper Project in the Philippines, with a historical estimate of 339.0 Mt at 0.35% Cu for 1.19 Mt of contained copper.
- The estimate is a JORC 2004 historical figure that Cooper has not validated, so the project's value hinges on re-reporting it under JORC 2012.
- The $4.85 million raise at $0.075 per share, a 24% discount to the 15-day VWAP, is backed by firm placement commitments and a Veritas-underwritten entitlement issue.
- The big cash payments are staged, including US$10 million at a positive FID, and 45,000,000 Performance Rights convert only on a JORC 2012 resource above 500,000 tonnes of contained copper.
- The next firm marker is the notice of meeting for shareholder approval, with about $3.0 million of Colet work planned over 12 months and drilling targeted early next year.
Cooper Metals Acquires Right to 85% of Colet Copper Project in the Philippines
Cooper Metals (ASX: CPM) has entered into a binding share sale agreement (the Chalterra SPA) to acquire an 85% interest in Chalterra Pty Ltd. Chalterra holds an option over 100% of Colet Mining & Development Corporation and, through it, the Colet Copper Project on Negros Island in the Philippines.
The headline number is a historical estimate of 339.0 Mt at 0.35% Cu for 1.19 Mt of contained copper (JORC Code 2004, 0.2% Cu cut-off). It is not a JORC Code 2012 Mineral Resource, and Cooper has not independently validated it.
The project also carries more than 124,000 metres of historical drilling and a 2012 technical study by AMEC Minproc. On completion, the company would have an undiluted market capitalisation of approximately $20 million (indicative, based on an issue price of $0.075 per share).
Tim Armstrong, Executive Director
“At a time when copper supply is tightening and new discoveries and approvals lag, it is our view that assets like this are becoming increasingly scarce and are of strategic value.”
Historical estimate at a glance
The estimate was prepared by Mining Associates for a former joint venture partner, Copper Development Corporation Limited, and reported in June 2012. Figures are rounded and may not sum.
| Category | Tonnes (Mt) | Copper (%) | Copper (kt) |
|---|---|---|---|
| Measured | **130.9** | **0.41** | **536** |
| Indicated | **152.2** | **0.34** | **511** |
| Inferred | **55.9** | **0.25** | **140** |
| Total | **339.0** | **0.35** | **1,187** |
The caution is simple: a Competent Person has not done sufficient work to classify the estimate as Mineral Resources under the JORC Code 2012, and it may materially change after further work.
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Inside the Colet Copper Project
Two shallow porphyry deposits with upside
The project currently comprises two shallow porphyry copper deposits, Don Jose and A1. Both sit within Mineral Production Sharing Agreement MPSA 217-2005-VI, which covers approximately 2,965 hectares, was granted on 2 August 2005 for a term of 25 years and is eligible for a further 25 year renewal.
Infrastructure and environmental work stand out for an exploration-stage asset:
- Approximately 20 km by road from the coastal town of Hinoba-an and 25 km from Sipalay City.
- The national grid substation at Maricalum is approximately 25 km from the project.
- An environmental baseline study was completed by consultants GAIA South for the former operators in 2011 and 2012.
Part of A1 (approximately 17.6 Mt at 0.25% Cu) lies outside the MPSA, in ground now covered by a pending Exploration Permit Application (EXPA) lodged by Chalterra. If granted, that tenement would be held 100% by Chalterra, does not form part of the Colet SPA, and there is no certainty the application will be accepted or granted.
The historical reports identify potential to extend the known copper mineralisation:
- Mineralisation is not closed off to the south.
- At A1, mineralisation remains open at depth and is currently defined to approximately 350 metres below surface.
- Further copper prospects include A2, within the MPSA, and Luz, which lies outside the MPSA within the area of Chalterra’s pending EXPA.
- Mining Associates (2012) interpreted gold mineralisation on the eastern flank of Don Jose to lie on the same regional structure as Philex Mining’s Bulawan gold mine. That is regional context only, not a representation of mineralisation at the project.
What is a historical estimate?
A historical estimate is a resource figure reported under an older rulebook, here the JORC Code 2004, by a previous owner. The JORC Code is the Australian standard for reporting mineral resources, and the 2012 edition is the current one.
Until the figure is re-reported under JORC 2012, it cannot be treated as a Mineral Resource. For you as an investor, that gap between “historical” and “JORC 2012” is where the project’s value is still to be proven.
To report under JORC 2012, Cooper will need to:
- Recover and validate the drillhole database.
- Verify historical collar locations and survey datums.
- Complete check assaying on retained core and pulps, including at an umpire laboratory.
- Complete confirmation and twin drilling.
- Complete a new estimate by a Competent Person.
The Chalterra Performance Rights are tied to this outcome. They convert only on delineation of a JORC 2012 compliant Mineral Resource exceeding 500,000 tonnes of contained copper at a 0.2% Cu cut-off.
Deal Terms and $4.85 Million Capital Raising
Key transaction terms
| Item | Terms |
|---|---|
| Chalterra Consideration Shares | **82,209,000** fully paid ordinary shares in Cooper, issued to the Chalterra Pty Ltd shareholders in proportion to their shareholdings |
| Chalterra Performance Rights | **45,000,000**, converting **1-for-1** on delineation of a JORC 2012 compliant Mineral Resource exceeding **500,000 tonnes** of contained copper at a **0.2% Cu** cut-off |
| Royalty | **1.5%** net smelter return royalty; Cooper may buy back **0.75%** for **A$3 million** |
| Retained interest | Chalterra vendors retain **15%**, free carried until Cooper declares a positive Final Investment Decision (FID) |
| Board | Cooper may appoint three nominee directors to the Chalterra board so that it holds a majority of board seats |
On completion, Cooper will also assume Chalterra’s staged payment obligations under the separate Colet SPA:
| Trigger | Payment |
|---|---|
| December 2026 | **US$250,000** cash |
| April 2027 | **US$250,000** cash |
| Final Investment Decision (FID) | **US$10 million** cash, on exercise of the option to acquire a 100% equity interest in Colet Mining |
| 24 months after FID, or on declaration of commercial production | **US$4 million** cash |
| Production Payments | Four annual payments of **US$4 million** each, commencing 12 months from the declaration of commercial production, followed by **US$5 million** in year 5 |
The source describes these obligations as staged and substantially linked to project milestones and cash flow from production. Shareholders of Chalterra will be subject to voluntary escrow of 12 months for 73% of the total share consideration received.
Funding the deal
The acquisition and initial work programme are to be funded by a capital raising of approximately $4.85 million (before costs) at $0.075 per share, approximately a 24% discount to the 15 day VWAP (volume-weighted average price).
- A single tranche placement of 28,748,640 shares, with firm commitments, to raise $2,156,148.
- A fully underwritten 1-for-4 non-renounceable entitlement issue of 35,935,800 shares to raise a further $2,695,185.
- One free attaching option, exercisable at $0.15 and expiring three years from issue, for every four shares subscribed under the placement and entitlement issue.
Directors intend to take up their entitlements, and Veritas Securities was appointed to fully underwrite the entitlement issue. Cooper intends to spend approximately $3.0 million on the Colet work program over the next 12 months, funded from the capital raising, and to continue advancing its Mt Isa East, Gooroo and Pyramid projects.
Key dates for the entitlement issue:
- Prospectus lodged: 16 October
- Record Date: 21 October
- Rights Issue closing date: 4 November
- Results announced: 11 November
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Approvals, Next Steps and What to Watch
The deal is subject to customary conditions, including due diligence to Cooper’s satisfaction, regulatory and third-party approvals, and shareholder approval. An Independent Expert has been appointed to opine on the “fairness and reasonableness” of the transaction.
Director Michael Frayne is a beneficiary of a major shareholder of Chalterra, which triggers ASX Listing Rules 10.1 and 10.11. Ilwella Pty Ltd and AIC Mines Limited, representing approximately 20% of current issued capital, intend to vote in favour. There will be no change to the Cooper board.
The next steps set out by the company are:
- Complete the placement and the underwritten entitlement issue.
- Despatch a notice of meeting and convene a general meeting to seek shareholder approvals.
- Commence site access, community engagement and environmental work, and mobilise for surface sampling, mapping and RC drilling.
- Undertake the data verification and validation work to assess whether the historical estimate can be reported under the JORC Code 2012.
Armstrong said drilling is planned “early next year”. The transaction complements Cooper’s existing copper-gold portfolio of Mt Isa East, Pyramid and Gooroo. The date of the general meeting is yet to be determined, so watch for the notice of meeting as the next firm marker.
Cooper’s existing portfolio is already moving toward the drill bit, with maiden drilling at Ardmore North and Attina at Mt Isa East setting the pace for the company’s copper-gold exploration activity alongside the new Philippines asset.
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