How Will AIC Mines’ US$40M Deal with Trafigura Transform Its Copper Output?
AIC Mines has locked in a US$40 million prepayment facility tied to a copper offtake agreement with Trafigura, aiming to boost processing capacity at its Eloise mine.
- US$40 million prepayment facility secured from Trafigura
- Offtake agreement for approximately 400,000 dmt of Jericho copper concentrate
- Facility funds expansion of Eloise processing plant in Queensland
- No commodity hedging and flexible early repayment terms
- Longstanding partnership with Trafigura extended to Jericho concentrate
Strategic Financing to Accelerate Growth
AIC Mines Limited (ASX – A1M) has announced a significant financing milestone with the execution of a US$40 million prepayment facility from Trafigura Asia Trading Pte Ltd. This facility is directly linked to a new offtake agreement for copper concentrate from the Jericho Mine, marking a strategic step in funding the expansion of the Eloise processing facility in Queensland.
The prepayment facility stands out for its flexible terms, notably lacking any commodity hedging requirements and allowing for early repayment. This structure provides AIC Mines with financial agility as it scales up operations, while securing a committed buyer for its copper concentrate.
Offtake Agreement Details and Operational Implications
The accompanying offtake agreement obligates AIC Mines to deliver a minimum of approximately 400,000 dry metric tonnes (dmt) of copper concentrate from the Jericho Mine. Payment terms are market-based and structured to reflect industry benchmarks, with initial payments made promptly after shipment documentation and final settlements following assay confirmations.
This agreement extends AIC Mines’ existing relationship with Trafigura, which has been a partner since 2021 through a life-of-mine offtake contract for Eloise concentrate. The expansion to include Jericho concentrate signals confidence in both the operational outlook and the strength of this partnership.
Financial and Strategic Context
The facility carries an interest rate tied to the 3-month US Dollar Secured Overnight Financing Rate (SOFR) plus 3% per annum, with an availability period of up to 18 months and a maturity date 36 months after the availability period ends. The repayment schedule includes a grace period of up to 18 months before quarterly repayments commence, easing near-term cash flow pressures.
Security arrangements are comprehensive, including charges over mining leases, shares in subsidiaries, and other collateral, reflecting the scale and importance of this transaction to AIC Mines’ capital structure. The company engaged Amicaa Advisors Pty Ltd to advise on the transaction, underscoring the complexity and significance of the deal.
Looking Ahead
Managing Director Aaron Colleran highlighted the competitive tender process that led to selecting Trafigura, praising the company’s supportive role since 2021. The funding and offtake agreement collectively underpin AIC Mines’ growth strategy, enabling the company to enhance processing capacity and secure market access for its copper concentrate.
As AIC Mines moves forward with the Eloise expansion and Jericho production ramp-up, the market will be watching closely for operational updates and financial impacts stemming from this pivotal agreement.
Bottom Line?
This deal cements Trafigura as a key partner and sets the stage for AIC Mines’ next growth phase.
Questions in the middle?
- How will the Eloise processing expansion impact production volumes and costs?
- What are the pricing benchmarks and how might market fluctuations affect revenue?
- Could AIC Mines pursue similar financing structures for other projects in its portfolio?
