REG - Galileo Resources - JV over Luansobe Copper Project, Zambia
30/12/2021 07:00
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RNS Number : 9851W Galileo Resources PLC 30 December 2021
For immediate release
30 December 2021
Galileo Resources Plc
("Galileo" or "the Company")
Joint Venture Agreement over
Luansobe Copper Project, Zambia
Galileo Resources plc ("Galileo "or the "Company") is pleased to provide
details regarding a Joint Venture Agreement (the "JV Agreement") entered into
on 29 December 2021 with Statunga Investments Limited (the "Vendor")
covering the Luansobe Copper Project, Zambia comprising Small Scale
Exploration Licence No. 28340-HQ-SEL (the "Licence") (the "Project")
Highlights
US$400K in Initial JV Period and 5M Galileo shares to earn 75% JV Interest The JV Agreement provides Galileo the right to earn an initial 75% interest in
a special purpose joint venture company (the "JV Company") to be established
under Zambia law to, with Ministerial Consent, acquire the Licence, and the
technical information and other information and assets related to the Luansobe
Project by making an initial payment of US$200,000 and a second payment of
US$200,000 in the initial period from the date of the JV Agreement by 20
February 2022 (the "Initial JV Period") and issuing 5,000,000 Galileo shares
to the Vendor. Based on the closing price share price of 0.98 pence on 29
December 2021 the last practicable date prior to this issue of this
announcement, the aggregate consideration will be approximately £350,000.
Further project assessment during Initial JV Period During the Initial JV Period Galileo will conduct further due diligence in
relation to the Luansobe Project and may at its sole discretion at any time
prior to the end of the Initial JV Period give notice to the Vendor that it
has decided not to proceed with the Joint Venture.
Technical management of JV Galileo has undertaken to commence raw data investigation of the technical
information available in relation to the Project and devise an exploration
programme for the Luansobe Project, which in their opinion maximise the value
of the Luansobe Project with a view to completing a Project Feasibility Study
within 18 months of 20 February 2022.
Project near giant Mufulira copper mine The Luansobe prospect is situated some 15km to the northwest of the Mufulira
Mine site, with mineralisation occurring as stratabound layers and lenses
dipping at 30 degrees to the northwest along the same stratigraphic horizon as
the giant Mufulira copper mine, which produced well over 9Mt of copper metal
during its operation.
Very prospective historic studies The Company has access to historic non JORC compliant reports provided by the
Vendor based on previous exploration on the Project.
Copper mineralisation is reported to occur over about 3km of strike and to at
least 1,250m depth. A 1974 report suggests the potential for a non-JORC
compliant global resource of over 20Mt @ 2.51% Cu, with a significant
proportion of oxide mineralisation occurring in the upper 70m, below the
leached cap. Based on these reports the deposit appears open and relatively
untested at depth
Project Plan Galileo plans to review past exploration data to develop a significant
drilling programme focussed on testing the tenor and extent of the copper
mineralisation indicated by previous drilling and nearby mining. The programme
will incorporate twinning of selected holes from the most recent 2007 drilling
programme to bring the project up to JORC 2012 status, with a particular focus
on the early-mining potential of the shallower oxide copper and the
development of a larger-scale copper sulphide mine.
To this end, the Company aims to undertake a Project Feasibility Study by
August 2023
Colin Bird Chairman & CEO said: "We are very pleased with the addition of
the Luansobe brownfield Project within the Zambian Copperbelt, with the
Project situated directly along strike and in close proximity to the very
large Mufulira mine which has produced well over 9Mt of copper metal during
its operations. The Project area has been tested by numerous drill holes in
various campaigns from 1921 to 2007, with semi-continuous mineralisation
reported along about 3km of strike and to at least 1,250m depth. Historical
reports suggest the potential for very significant copper resources of up to
20Mt @ 2.51% Cu. Galileo proposes to undertake a substantial drilling
programme to update the reported resource to JORC-compliant status with the
twin objective of delineating a near-surface copper oxide deposit with early
development potential and an underlying sulphide deposit for larger-scale
development. "
Summary
Galileo has entered into a Joint Venture agreement with Statunga Investments
Limited (the "Vendor"), a private Zambian company which holds the Luansobe
Project comprising small-scale exploration licence No. 28340-HQ-SEL, covering
an area of 918 Hectares granted on 16 February 2021 and with its initial 4
year term expiring on 15 February 2025. The principal shareholders of the
Vendor are Zambian businessmen.
The Luansobe area is situated some 15km to the northwest of Mufulira Mine in
the Zambian Copperbelt which produced well over 9Mt of copper metal during its
operation. It forms part of the northwestern limb of the northwest - southeast
trending Mufulira syncline and is essentially a strike continuation of
Mufulira, with copper mineralisation hosted in the same stratigraphic
horizons. At the Luansobe prospect mineralisation occurs over two contiguous
zones, dipping at 20-30 degrees to the northeast, over a strike length of
about 3km and to a vertical depth of at least 1,250m.
The top 30m from surface is reported to be leached, with oxide mineralisation
occurring below this depth to about 70m below surface. Beyond this depth,
copper generally occurs as sulphides. The deposit is reported to be open and
relatively untested at depth. About 30% of the total contained copper occurs
in acid soluble form (as copper oxide) - this is expected to be higher in the
shallower parts of the deposit.
ExplorationGeology/Mineralisation
The Luansobe area is situated some 15km to the northwest of Mufulira Mine in
the Zambian Copperbelt which produced well over 9Mt of copper metal during its
operation. It forms part of the northwestern limb of the northwest - southeast
trending Mufulira syncline and is essentially a strike continuation of
Mufulira, with copper mineralisation hosted in the same stratigraphic
horizons. In At the Luansobe prospect mineralisation occurs over two
contiguous zones, dipping at 20-30 degrees to the northeast, over a strike
length of about 3km and to a vertical depth of at least 1,250m.
The top 30m from surface is reported to be leached, with oxide mineralisation
occurring below this depth to about 70m below surface. Beyond this depth,
copper generally occurs as sulphides. The deposit is reported to be open and
relatively untested at depth. About 30% of the total contained copper occurs
in acid soluble form (as copper oxide) - this is expected to be higher in the
shallower parts of the deposit.
Historic Exploration
Based on historical reports, drilling in the Luansobe prospect area first
commenced in 1921 and continued intermittently to 1976. A total of 104 surface
exploration boreholes were drilled on the prospect during this period. The
subsequent report by V.D Fleischer in 1974 has been the main reference
material. The area was estimated to contain over 20 million tonnes averaging
2.51% total copper assuming unbroken continuity between intersections and
applying no rigid thickness criteria.
Later, more detailed drilling to test mineralisation to a depth of 150 metres
below surface was carried out through 2006 and 2007. A total of 8,300m of
diamond drilling was reported as completed in 69 drillholes. Several non-JORC
compliant resource estimates were carried out at different stages up to 2008
over segments of the deposit - these will be reviewed by Galileo.
Project Potential
The Company believes that the Project has very significant potential and will
be undertaking a raw data investigation of the technical information available
in relation to the Project to devise an exploration programme for the Luansobe
Project which will involve a significant drilling programme with the
objectives of verifying previously reported drill results, in the form of hole
twinning, as well as infill/extension drilling to upgrade the resource status
and extend the resource. Galileo's aim would be to develop a JORC (2012)
compliant resource on which to base a Project Feasibility Study. It is
believed that there is considerable scope to increase the historic resource
estimates - especially down-dip. The Project Feasibility Study is to be
concluded within 18 months of the Initial JV Period though the study may be
extended by a further 6 months if during the initial 18 months a
JORC-compliant Resource is reported for the Project.
Project Licence
Statunga Investments Limited (the "Vendor"), a private Zambian company owns
the Luansobe Project comprising small-scale exploration licence No.
28340-HQ-SEL, covering an area of 918 Hectares granted on 16 February 2021 and
with its initial 4-year term expiring on 15 February 2025.
Summary of JV Agreement Terms
1) Parties Statunga Investments Limited (hereinafter referred to as "Vendor") and Galileo
Resources Plc entered into the JV Agreement on 29 December 2021
2) Luansobe Project The Luansobe Project's location in Zambia relative to the Mufulira Copper Mine
in Zambia is situated approximately 15 kilometres to the North West of
Mufulira Mine site as per a 27 February 2008 report ( "2008 Report") provided
by the Vendor. The western limit is bounded by the international border with
the Democratic Republic of the Congo (DRC). The Luansobe Project forms part
of the western limb of the northwest - southeast trending Mufulira syncline
and has an estimated non-JORC compliant mineral resource totalling 5.5 million
tonnes at 1.6%TCu, 0.5%ASCu and covers the full area of the shallow oxide
zone, down-dip to include the mixed oxide-sulphide zone and the deeper
sulphide zones as delineated by drilling in 2006-07 and reported in the 2008
Report. The Luansobe (Insato, Kasaria) Technical report also provided by the
Vendor refers to an Indicated Mineral Resource of 14.2 million tonnes at 2% Cu
and the project being 10 kilometres north-west of Mufulira in the Copperbelt
Province and contained within ZCCM's Licence "Mufulira ML 15)
(hereinafter the foregoing are collectively referred to as either the
"Project" or the "Luansobe Project")
3) Initial JV period (a) By entering into the JV Agreement the parties agreed on an exclusive
basis to enter into a joint venture in relation to the Luansobe Project. The
initial period is from the date of the JV Agreement to 20 February 2022 (the
"Initial JV Period").
(b) During the Initial Period Galileo will conduct due diligence in relation
to the Luansobe Project and may at its sole discretion at any time prior to
the end of the Initial Period give notice to the Vendor that it has decided
not to proceed with the Joint Venture ("Notice Not To Proceed"). In the event
of Galileo giving Notice Not To Proceed (i) Galileo will not be liable to pay
the Second JV Payment (ii) Galileo will only be entitled to a refund of the
Initial JV Payment in the event of a title defect of the Licence or material
misrepresentation under the Vendor's warranties ("Refund Entitlement") ; and
(iii) The JV Agreement will be terminated and the parties will have no
further obligations or liabilities under this agreement save if Galileo is due
a Refund Entitlement.
4) Payments by Galileo (a) Galileo has to pay the initial payment of US$200,000 by 31 December 2021
(the "Initial JV Payment").
(b) Galileo has to pay the second payment of US$200,000 by no later than 20
February 2022 but may elect to make the payment early (the "Second JV
Payment").
1) Issue of Galileo Shares & lock up Upon payment of the Second JV Payment Galileo is to issue 5,000,000 (Five
Million) Galileo Resources PLC shares to the Vendor which shall be subject to
a three month lock up arrangement and thereafter a further three months
orderly market arrangement. Under the orderly market arrangement the shares
can be sold via Galileo's broker at a price determined by the Vendor (the
"Nominated Sale Price") which shall not be less than the lower of i) 10 day
VWAP and ii) Galileo closing bid price on the day before the fixing of the
Nominated Sale Price and Galileo's broker will have 10 business days to sell
the shares at the Nominated Sale Price.
2) Joint Venture The JV Agreement established a joint venture in relation to the Luansobe
Project (the "Joint Venture") and once Galileo has paid the Second JV Payment
(referred to above); Galileo or its nominee will be issued 75% of the shares
in a to be established Zambian joint venture company (the "JV Company") to own
the Licence, technical information and other information and assets related to
the Luansobe Project and the Vendor will be issued 25% of the shares in the JV
Company
3) Warranties by Vendor The Vendor has made warranties in relation to it being the registered legal
and beneficial owners of the Licence; the Licence is in good standing and
covers the whole of the Luansobe Project; and other customary warranties
4) Technical management of JV (a) Galileo is to undertake to commence a raw data investigation of the
technical information available in relation to the Project and devise an
exploration programme for the Luansobe Project, which in Galileo's opinion
will maximise the value of the Luansobe Project and conduct a feasibility
study, which in their opinion will identify the most economic and practical
way of advancing the project.
(b) The parties have agreed that a benchmark expenditure for the raw data
investigation and exploration to complete a project feasibility study (the
"Project Feasibility Study Work") is US$4,000,000 (the "Benchmark
Expenditure"). In the event that the actual expenditure incurred on the
Project Feasibility Study Work prior to a sale is;
1. less than the Benchmark Expenditure then the shortfall (the
"Benchmark Expenditure Shortfall") shall be added to the Vendor's share of
the gross sale proceeds as per point 8 (a) below; and
2. more than the Benchmark Expenditure then the excess (the "Excess
Benchmark Expenditure ") shall be deducted from the Vendor's share of the
gross sale proceeds as per point 8 (a) below.
(c) The Project Feasibility Study is to be concluded within 18 months from
20(th) February, 2022 and may be extended by a further 6 months if during the
initial 18 months there is a JORC resource for the Project (the "Feasibility
Study Period") .
5) Decision to Mine and funding (a) If a decision to mine is made by Galileo (a "Decision to Mine"), then
the parties will be entitled to fund pro rata to their beneficial interest in
the JV Company and will seek funding for a mine.
(b) Should the Vendor elect not to fund their 25%, then their interest will
be assumed on a carried basis ("Vendor Funding") to be borne by a specific
purpose vehicle to be formed to raise the funding amount as debt for the
project construction ("SPV FundingCo") and the SPV FundingCo will recover the
Vendor Funding from future cashflows on terms and conditions to be agreed upon
by the parties to the Vendor Funding.
(c) The Vendor is not obligated to obtain the Vendor Funding from the SPV
FundingCo and is at liberty to engage and obtain funding from a commercial
lending institution creating security only to the extent of the Vendor's
interest in the JV company
(d) In the event that Galileo makes a decision not to mine, the parties
agree to seek to sell the Project on the terms of point 8 below and /or obtain
a new investor.
6) No commitment Galileo makes no representation or commitment to develop a mine and will
to Mine only progress to the development of a mine if in their opinion the in-situ or
primary material fulfil their requirements for investment.
7) Distribution Upon commercial production the agreed and disclosed debt ( indicative of the
of cashflows principal sum, interest per annum, instalments and duration/period) shall be
deducted out of the daily of cashflow for debt servicing. The remaining
amount available shall be paid 75% to Galileo and 25% to the Vendor net of
operational costs.
8) Consequence In the event of a third party sale of the Luansobe project and / or the JV
Company after the Second JV payment the gross sale proceeds will be
of sale distributed as follows;
(a) First Priority: The Vendor will be entitled to US$6,000,000 (the
"Base Vendor Sale Consideration") plus the Benchmark Expenditure Shortfall
less the Excess Benchmark Expenditure (the "Vendor's Priority Return"). By way
of example in the event that prior to a sale no money has been spent by
Galileo on the Project Feasibility Study Work then the Vendor's Priority
Return would equal U$10,000,000 (US$6,000,000 of Base Vendor Sale
Consideration + US$4,000,000 of Benchmark Expenditure Shortfall); and
(b) Second Priority: After the Vendor has been paid the Vendor's
Priority Return the balance of the sale proceeds shall be paid 75% to Galileo
and 25% to the Vendor.
The Vendor will have come along rights so Galileo cannot sell without giving
the Vendor the opportunity to sell on the same terms on a pro rata basis.
9) Maintenance Vendor to assist on an ongoing basis in maintaining the Licence in good
of Licence standing with government agencies and local communities.
10) JV Committee A joint venture committee shall be formed, comprising three representatives
from Galileo and two from the Vendor. The chairman shall be a representative
and appointee of Galileo.
11) JV Agreement on establishment of JV Company It is agreed by the parties that upon establishment of the JV Company the
parties will enter into a joint venture agreement in relation to the JV
Company which shall encompass all of the commercial terms contained in the JV
Agreement (the "JV Company Agreement"). The JV Company Agreement matters will
consist of the following, but not be limited to the commercial terms outlined
in the JV Agreement, grievance procedures, arbitration procedures, notices,
joint venture committee functions, licence maintenance, SPV construction.
12) Information rights Both parties shall from the signing of this agreement be afforded full access
rights to all information in relation to the Luansobe Project.
13) Zambia law This agreement shall be governed by the laws of Zambia.
14) Assignment Neither party shall assign the rights of this agreement to a third party
without the permission of the other party.
15) Termination This agreement will only be terminated if;
(a) The parties jointly agree in writing to terminate the agreement; or
(b) If Galileo has given Notice Not to Proceed; or
(c) If Galileo fails to meet any conditions precedent.
Technical Sign-Off
Technical information in this announcement has been reviewed by Edward (Ed)
Slowey, BSc, PGeo, Technical Director of Galileo. Mr Slowey is a geologist
with more than 40 years' relevant experience in mineral exploration and
mining, a founder member of the Institute of Geologists of Ireland and is a
Qualified Person under the AIM rules. Mr Slowey has reviewed and approved
this announcement.
You can also follow Galileo on Twitter: @GalileoResource
For further information, please contact: Galileo Resources PLC
Colin Bird, Chairman Tel +44 (0) 20 7581 4477
Beaumont Cornish Limited - Nomad Tel +44 (0) 20 7628 3396
Roland Cornish/James Biddle
Novum Securities Limited - Joint Broker +44 (0) 20 7399 9400
Colin Rowbury /Jon Belliss
Shard Capital Partners LLP - Joint Broker Tel +44 (0) 20 7186 9952
Damon Heath
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").
Technical Glossary
"ASCu" Acid soluble (oxide) copper
"Indicated Mineral Resource" That part of a Mineral Resource for which quantity, grade (or quality),
densities, shape and physical characteristics are estimated with sufficient
confidence to allow the application of Modifying Factors in sufficient detail
to support mine planning and evaluation of the economic viability of the
deposit. Geological evidence is derived from adequately detailed and reliable
exploration, sampling and testing gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes, and is
sufficient to assume geological and grade (or quality) continuity between
points of observation where data and samples are gathered. (JORC 2012)
"JORC Code" Australasian Institute of Mining and Metallurgy Joint Ore Reserves Committee
code on mineral resources and ore reserves
"syncline" An upwardly concave fold of a rock formation
"TCu" Total copper
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