Phoenix Copper (LON: PXC) shares have fallen slightly Wednesday after it announced that it has entered into agreements with Honolulu Copper Corporation and Mackay LLC to acquire part of the 2.5% royalty payable to them and the Honolulu mining claims regarding the mining leases on the Empire Mine in Idaho, USA.
Phoenix has acquired 1.25% of the royalty payable to Honolulu, including Honolulu's underlying patented and unpatented mining claims, and 1% of the royalty payable to Mackay, for $1.3 million payable in cash.
So far, $550,000 has been paid, and $750,000 is payable in three installments of $250,000, due on December 31, 2021, 2022, and 2023.
Following the royalty acquisition, Konnex Resources, the company's 80% owned subsidiary and operator of the Empire Mine, will pay a 1.25% royalty to Honolulu plus a 1.25% royalty to Phoenix, or a 1.5% royalty to Mackay plus a 1% royalty to Phoenix, based on the order the claim blocks are mined.
Richard Wilkins, CFO of Phoenix Copper, commented: “Our preliminary economic model for the Empire open pit mine, which is based on a $3.60 copper price, forecasts gross revenue of $836 million over an initial 10-year project life.
“The royalty now payable to Phoenix should therefore represent significant additional revenue to Phoenix over the same period and is intended to contribute additional funds to the corporate dividend policy which we plan to adopt for the benefit of our shareholders.”
Phoenix Copper shares are currently down 0.36% at 70.2p.
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