Copper production at Compass Resources' Browns Oxide project

COMPASS Resources has announced the proposed issue of a note to joint venture partner Hunan Nonferrous Metals Corporation for the amount of $US10 million ($A14.8 million).

The note will be converted to a convertible note and then converted into Compass shares at a market-based price to be agreed on.

The funds will contribute to working capital for the Browns Oxide copper project in the Northern Territory, which was commissioned in September after lengthy delays and cost blowouts.

Chinese company Hunan is Compass’s joint venture partner at Browns and has already contributed $A72 million towards development of the project.

Under the existing agreement, Compass is the JV manager, and operating costs are split evenly between the two companies.

Production will be split evenly and each company is responsible for its own sales.

Compass has signed a three-year off-take agreement with Sempra Metals and Concentrates, and around 70 tonnes of copper cathode was trucked from the minesite to the Port of Darwin on Wednesday.

The $US10 million will be subject to regulatory approvals and Compass shareholder approval.

Compass said the board welcomes Hunan’s increased equity position in the company.

Shares in Compass Resources jumped 48% or 24c today to 43c.