Austral Resources Australia (ASX:AR1) said it has completed the settlement of Lady Loretta, after receiving $40 million from Glencore under the transaction terms, according to a Thursday Australian bourse filing.

The company said about AU$14.4 million of the proceeds have been applied to cash back the estimated rehabilitation bond, with Austral assuming progressive rehabilitation obligations.

Under the transaction terms, Austral will pay Glencore a 2.5% net smelter return royalty on all copper oxide and sulphide production from the Lady Loretta tenements, along with an offtake agreement for all copper products derived from the tenements, the filing added.

The Lady Annie expansion, known as Annie Deeps, is to be activated with drilling commencing in the third quarter, while a strategic pit wall cutback to grow the company's ore supply pipeline will commence in the second quarter, the filing added.

The cash proceeds from the settlement move Austral to a debt-free position, strengthening its balance sheet, it added.