Cyprium Mining (CUG-V) Oct 1st, 2014 News Release
Highlights of the transaction:
Exclusive use of the mill for five years
100 metric tons per day capacity with opportunity to double capacity
Operational control to be performed by Cyprium
Pilot/pre-production operations for Las Cristinas project F
inancial advantages of the transaction:
Short-term path to cash flow through toll milling
Minimal investment required to double capacity
Production facility will be available for mine start-up and production of the Las Cristinas project without significant CAPEX
Cyprium Mining Corporation ("Cyprium" or the "Company") is pleased to announce that, through its wholly-owned Mexican subsidiary Cypriumex S.A. de C.V., it has secured the exclusive use of a 100 metric tons per day flotation plant located outside the City of Chihuahua in Northern Mexico. The plant will immediately be used by Cyprium to offer toll milling services to local miners in the area. The plant will eventually be used by Cyprium for its own use once the Company's Las Cristinas project goes into production.
"When André - the Company`s President and CEO - and I co-founded Cyprium in 2012, we focused our business plan on generating revenues in the short-term, keeping CAPEX at a minimum and acquiring mining projects in Northern Mexico which have large exploration potential," said Alain Lambert, Chairman of Cyprium. "While the drilling results announced yesterday confirm the exploration potential of the copper/silver Las Cristinas project, today's announcement clearly puts us on the path for cash flow in the short term. By securing access to a production plant we have the opportunity to immediately start offering toll milling services to local miners while at the same time providing an avenue for the eventual production from our Las Cristinas mining operations."
"While the Company's plan remains to build a production facility at the Las Cristinas property in 2015, the agreement announced today will allow us to continue to advance our Las Cristinas project without having to plan large investment in CAPEX for a processing plant," said Andre St Michel, President and C.E.O.
The five year agreement provides for Cyprium to use the plant on a variable cost basis as it will pay the owner of the plant a pre-determined tolling charge based on metric tons milled. Cyprium will also be responsible for the supervision of all metallurgic processes, including quantitative chemical analysis, assaying of samples and determining feed grades.
Chihuahua State is a vibrant mining jurisdiction with several small operating mines. Having access to one of the few mills in the area, Cyprium is uniquely positioned to leverage its management's long experience in milling operations. The Company intends to start immediately to offer milling services to miners in Northern Mexico. Any profits from milling operations will, consistent with the Company's business plan, be reinvested in the development of the Las Cristinas property, including building its own processing facility at the mine site in the second half of 2015.
Mr. Lambert concluded: "We have now achieved a major milestone in the development of Cyprium's business. Having access to a processing facility without the need to build or to make major investments not only will help minimize the dilution of our shareholders but it will provide us with the ability to start generating revenues even before Las Cristinas comes into production."
As of February 2015, in order to maintain its exclusivity, Cyprium shall supply the plant a minimum of 1,000 metric ton of ore milled per month or make payments representing such level of monthly operations. As of 2015, Cyprium shall have the obligation to make investments of a minimum of US $100,000 per year over four years with a view of doubling the capacity of the plant to 200 tons per day. Cyprium has the option to make investments to double the capacity quicker than over the four year period. These investments will include additional equipment and their installation costs ("Capital Investments") as well as investments to optimize production, obtain full permitting, the costs to ensure sufficient water and energy supply as well as the costs to repair and/or repair existing equipment ("Optimization and Other Costs"). Cyprium granted the owner of the plant an option to purchase the Capital Investment. Cyprium shall remain the owner of all Capital Investments made at the plant until the plant owner has paid Cyprium in full for the costs of the Capital Investments. The plant owner shall also have the obligation to pay back Cyprium for the Optimization and Other Costs on a per metric ton basis. |
