Ok Tedi Mining Limited (OTML) has affirmed the economics behind its recent acquisition of the Misima Island gold and silver project from Kingston Resources.
In a prepared statement, the company noted that both the valuation and the strategic fit of the project were in line with its goals and direction set out in its “Growth 2050” vision. In particular, it noted the acquisition had a post-tax net present value of A$1.86 billion at a gold price of $US2700 per ounce, as declared to the ASX in May.
It confirmed the first payment of $50 million had been transferred at the completion of the deal, with further $10 million milestone payments due after 12 months and after a final investment decision. A 0.5 per cent royalty will apply on production above 500,000 ounces of gold, with a buyback option for Ok Tedi set at $25 million.
“The Misima acquisition reflects a long-term strategic investment in PNG’s future, aimed at unlocking value for all stakeholders – landowners, the state, and the people of Papua New Guinea (PNG),” the company said.
The statement comes in response to questions raised in PNG parliament, and across media commentary.
OTML rejected any question of impropriety.
“The acquisition was subject to all required corporate governance approvals, including the full support of the Ok Tedi board and its major shareholder, Kumul Minerals Holdings,” the company said. “Ok Tedi engaged expert advisers to ensure the transaction was commercially sound and comparable to industry benchmarks.”
Ok Tedi also reiterated the acquisition’s long-term benefits to a range of stakeholders.
“All shareholders of Ok Tedi, including Kumul Minerals Holdings, and by extension the people of Papua New Guinea, stand to benefit through future dividends, tax and royalty revenue, and broader economic activity,” the company said.
“Ok Tedi also anticipates that Misima landowners will have the opportunity to acquire an interest in the project, alongside targeted investments in local infrastructure, employment, and social services.”
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