Metals Acquisition (MAC) (NYSE:MTAL,ASX:MAC) has signed a strategic investment deal with Polymetals Resources (ASX:POL), which is working to restart the Endeavor silver-zinc-lead mine and processing plant.

The transaction will see MAC make an initial AU$2.5 million investment in Polymetals for a 4.31 percent interest in the company. An additional AU$2.5 million is on the table subject to several conditions outlined in a Monday (May 27) press release, including Polymetals securing enough funding to restart the mine and processing plant.

The companies will also have to enter into a water offtake agreement, as well as a tolling agreement for the treatment of zinc ore delivered to Polymetals by MAC. In addition, MAC will have to secure third-party consent for its plans.

Polymetals is in the midst of acquiring Endeavor from CBH Resources, a subsidiary of Toho Zinc (TSE:5707). Endeavor is located in New South Wales’ Cobar Basin, which is known for its prolific mineral production.

MAC highlights in its release that Endeavor is located about 40 kilometres north of its CSA copper mine. CSA is one of the oldest operating copper mines in Australia, with mining activity dating back to 1871. The site was acquired by MAC from Glencore (LSE:GLEN,OTC Pink:GLCNF) in June 2023, and the company sees synergies with Endeavor.

Mick McMullen, CEO of MAC, believes the transaction could unlock value in the Cobar Basin.

“As recently announced, the CSA Copper mine appears to host high grade zinc mineralisation near surface and adjacent to existing development. Subject to exploration success, modifying factors and some permitting, we think that having the option to treat this material at Endeavor can potentially create significant value for our shareholders,’ he said.

The deal between MAC and Polymetals follows the release of MAC’s latest quarterly activities report on April 29. The company reported copper production of 8,786 tonnes, down 11 percent from the previous quarter. According to MAC, the decline came on the back of power issues and lower grades at CSA’s East and West deposits.

The company’s 2024 copper guidance is set at 38,000 to 43,000 tonnes. It also completed its Australian initial public offering during the first quarter, raising AU$325 million before costs.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.