The old Elura mine, now named Endeavour, a silver, lead, and zinc mine in central western NSW, is about to receive a new lease on life. Nearby, the Cobar copper mine might soon exploit recently discovered silver, lead, and zinc mineralization.

This follows the revelation of a seemingly complex shareholding and associated water purchase deal in a filing to the ASX on Monday. However, it's actually a well-thought-out set of steps to restart one old mine and commence mining in a new area by accessing a crucial water supply.

These deals promise more than just a shareholding and water purchase arrangement between Metals Acquisition Ltd (ASX:MAC) and Polymetals Resources (ASX:POL).

The first stage of the deal involves MAC acquiring an initial 4.31% ($2.5 million worth of shares at 35 cents each) stake in Polymetals, with the option to double that stake at the same price once certain conditions are met.

The news resulted in a significant surge in Polymetal shares, rising more than 21% to 33.5 cents on Monday morning.

The conditions include Polymetals securing enough funding to restart mining at Endeavour (formerly Elura) and its processing plant, an agreement for Polymetals to toll-treat zinc ore produced by MAC, and an agreement allowing MAC to draw 150 megaliters of water annually from the Endeavour pipeline for 4.5 years, with an option for MAC to extend the offtake based on good faith negotiations.

MAC must secure all necessary third-party agreements, including from its secured lenders and Cobar's former owner, Glencore. Additionally, MAC will have the right to appoint one director to the Polymetals board if it owns more than 7% of Polymetals shares.

Polymetals holds the rights to the Endeavour silver-zinc-lead Mine, located 43 kilometers northwest of MAC's Cobar copper mine.

While Endeavour itself lacks sufficient reserves to justify resuming mining, MAC believes newly discovered areas of mostly zinc mineralization do. If a deal can be reached to restart Endeavour, secure water, funding, and other agreements, MAC can mine the new areas and have the ore treated at Endeavour without the need for significant new processing plant investment.

Endeavour had a 38-year mine life and was one of the more prolific producers in the Cobar Basin, producing approximately 92 million ounces of silver, 2.6 million tonnes of zinc, and 1.6 million tonnes of lead. It was previously operated by CBH Resources from 2003 until 2023, originally opening in 1983 as the Elura mine and later renamed by CBH. Polymetals acquired the Endeavour mine in 2023.

In its Monday statement, MAC emphasized the strategic value of having the option to treat potential high-grade zinc mineralization near the surface from the CSA Copper Mine at Endeavour, potentially creating significant value for shareholders. Additionally, securing 150ML of water offtake for the next 4.5 years, with an option to extend, increases the potential throughput achievable at the CSA Copper Mine at a low cost.

The Polymetals management team, with over 30 years of experience in exploring, developing, and operating mines in the Cobar Basin, intends to restart operations at Endeavour. The asset includes significant infrastructure such as an underground mine with a decline and hoisting system, a 1.2 million tonnes per year processing plant, grid power, water, railway, and workshop facilities.

MAC CEO Mick McMullen stated on Monday that, "As recently announced, the CSA Copper Mine appears to host high-grade zinc mineralization near the surface and adjacent to existing development. Subject to exploration success, modifying factors, and permitting, we believe that having the option to treat this material at Endeavour can potentially create significant value for our shareholders. This is a logical way of securing a processing option for any zinc ore we might mine without distracting our operations from the core business of mining and recovering copper."