Phoenix Copper Updates Agreement with ExGen for Project Funding

Phoenix Copper and ExGen Resources Revise Partnership Agreement

Phoenix Copper Limited (AIM: PXC; OTCQX ADR: PXCLY) recently announced a significant update to its agreement with ExGen Resources Inc (TSX.V: EXG) regarding the Empire Open-Pit Project in Custer County, Idaho. This revision alters the original 2015 Agreement, introducing new terms that are designed to streamline funding for the construction of the project.

Key Changes in the Updated Agreement

The latest 2024 Amendment indicates that Phoenix Copper will no longer be obligated to make annual payments to ExGen or adhere to a minimum annual expenditure on the Project. Furthermore, the condition requiring Phoenix to present ExGen with a bankable feasibility study prior to ExGen contributing 20% of the construction costs has been eliminated.

Funding Structure through Konnex Resources

Instead, Phoenix plans to address ExGen’s share of construction costs by arranging a shareholder loan for Konnex Resources Inc., the Idaho-registered entity overseeing the project. Konnex is primarily owned by Phoenix's subsidiary, KPX Holdings Inc., which owns 80% of the project. It is projected that this loan, coupled with accrued interests, will be repaid using ExGen’s future cash flows generated from the Empire Open-Pit Project. The specifics of the loan will be made public once both parties firm up the agreement and Phoenix secures the necessary funding.

Leadership Viewpoint

Ryan McDermott, the CEO of Phoenix, expressed his positivity regarding the new terms of the agreement. He believes that these adjustments simplify the partnership dynamics and enhance the financing process for the construction of the Empire Open-Pit, allowing for smooth operations through the single shareholder loan approach.

Project Progress and Resource Management

The Empire Open-Pit Project encompasses a range of resources such as copper, gold, and silver, forming an integral part of Phoenix’s larger portfolio which is strategically located in the prominent Alder Creek mining district. Recent developments indicate that the project has witnessed noteworthy advancements, boasting proven and probable mineral reserves as reported in mid-2024.

Royalty and Mining Claims Retention

Phoenix Copper will hold on to the Honolulu royalty and mining claims, alongside the Mackay royalty that was acquired on October 27, 2021. Any future mining claims or royalties obtained by Phoenix or KPXH are slated to be offered for transfer to Konnex, adhering to the guidelines established in both the original 2015 Agreement and the recent 2024 Amendment.

Regulatory Considerations and Fairness Determinations

It is noteworthy that this amendment is classified as a related party transaction under AIM Rule 13, primarily due to shared directors among Phoenix, Konnex, and ExGen. Nonetheless, Catherine Evans, a Non-Executive Director of Phoenix, alongside the company's nominated adviser, has reviewed the revised terms and found them to be fair and reasonable for shareholders.

Commitment to Environmental Standards

Phoenix remains firmly dedicated to maintaining high environmental standards and adhering to ESG principles. Their objective is not only to meet legal obligations but also to establish a robust foundation for the company's environmental, social, and governance (ESG) initiatives.

Frequently Asked Questions

What changes were made to the agreement between Phoenix and ExGen?

The revised agreement eliminates annual payment requirements and the need for a feasibility study before funding contributions from ExGen.

How does Phoenix plan to finance ExGen's share of construction costs?

Phoenix intends to fund ExGen’s share through a shareholder loan to Konnex Resources Inc., with repayment expected from future cash flows.

Why is the revised agreement significant?

This agreement simplifies the partnership and improves the funding process for the Empire Open-Pit Project's construction.

What resources are associated with the Empire Open-Pit Project?

The project includes key resources such as copper, gold, and silver, which are essential to Phoenix's operations in the Alder Creek mining district.

How does Phoenix assure environmental compliance?

Phoenix emphasizes a strong commitment to environmental standards and ESG principles to ensure compliance and support sustainability in its operations.

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