TORONTO, ONTARIO--(Marketwired - Sep 10, 2013) - Anaconda Mining Inc. (ANX.TO) ("Anaconda" or "the Company") is pleased to announce that, on September 9, 2013, it received the US$1 million payment from Hierro Tal Tal S.A. ("Tal Tal") relating to the commercial production milestone set forth in the stock purchase agreement dated December 7, 2011 ("SPA"), between Inversiones La Veta SpA ("La Veta"), a wholly owned subsidiary of Anaconda, and Tal Tal.
President and CEO of Anaconda, Dustin Angelo, stated, "This is an important milestone for Anaconda. Although it is deemed a non-core asset, our investment in Chile will continue to generate cash for the Company. We expect ongoing royalties of approximately $125,000 per quarter and we will get another US$2 million payment in less than two years from now. In addition, we can still earn up to US$4 million in lump sum payments based on the price at which the iron ore is sold for certain volumes of production."
La Veta will also begin to receive a gross sales royalty of 0.80% on a calendar quarterly basis on the sale of iron ore concentrate from the first producing iron ore property. The first shipment that departed in early August contained 163,582 dry metric tonnes of iron ore concentrate grading 63.5% iron (certified by SGS). The total estimated royalty payment for this shipment is expected to be approximately US$125,000 and will be payable on or before October 15, 2013.
Overview of lump sum payments from the transaction:
Anaconda's wholly owned subsidiary, La Veta, sold its shares representing a 50% ownership stake in Minera Hierro San Gabriel S.A. ("MHSG") and a 20% ownership stake in Inversiones Hierro Antofagasta S.A. ("IHA") to Tal Tal for up to US$11 million in cash payments, of which US$2 million was paid at closing and an additional US$2 million was paid on May 30, 2012. Now that commercial production has been achieved, La Veta will receive an additional US$3 million, of which the first US$1 million was paid on September 9, 2013. The remaining US$2 million is due the earlier of (1) 30 days after the first shipment from the second producing iron ore property and (2) two years from the anniversary date when Tal Tal achieved commercial production from the first producing iron ore property. Furthermore, La Veta can earn up to another US$4 million based on the sales price realized for certain volumes of production from the properties, as defined in the SPA.
ABOUT ANACONDA
Headquartered in Toronto, Canada, Anaconda is a growth oriented, gold mining and exploration company with a producing asset located on the Baie Verte Peninsula in Newfoundland, Canada called the Pine Cove mine.