African Pioneer PLC (LON: AFP) shares rise 48% after announcing it has signed a definitive financing and mine development agreement with Hong Kong Xinhai Mining Services Limited, securing funding and technical support to advance its Ongombo and Ongeama copper projects in Namibia.
Under the agreement, Xinhai will finance, engineer, construct and commission the projects, providing 100% of the funding required to complete the first four agreed development milestones through a 10% secured loan facility.
The staged programme includes 7,000 metres of drilling, detailed engineering, delivery of construction equipment, additional exploration at Ongeama and commissioning of a 720,000-tonne-per-year processing plant, alongside the initial underground mine development.
Xinhai has also agreed to subscribe £712,786 for new African Pioneer shares at 1.15p per share, giving it a 10% stake in the enlarged share capital. The investment is priced at a 6.5% premium to the company’s previous closing share price.
The agreement allows Xinhai to convert its project financing into an equity interest of up to 73.68% in the Namibian project holding company following completion of the development milestones. African Pioneer would then have the option to exchange its remaining holding for a 4% net smelter return royalty on future project revenue.
Chairman Colin Bird said the agreement provides a fast-track route to developing the Ongombo copper-gold project, which contains around 300,000 tonnes of contained copper, while also accelerating exploration at the nearby Ongeama licence.
The company said the partnership combines its Namibian copper assets with Xinhai’s global engineering expertise, positioning the projects to move more rapidly from resource development towards production.
