REG - Galileo Resources - Option Agreement over Lithium & Gold Projects

Galileo ResourcesAnnouncement

07/03/2022 07:00

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RNS Number : 7790D  Galileo Resources PLC  07 March 2022

 

For immediate release

 

07 March 2022

Galileo Resources Plc

("Galileo" or "the Company")

 

Option Agreement over

Lithium & Gold Projects, Zimbabwe

 

Galileo Resources plc ("Galileo "or the "Company") is pleased to provide
details regarding an assignment agreement entered into on 4 March 2022 (the
"Deed of Assignment") which assigns to Galileo an option granted under an
agreement dated 21 January 2022 between BC Ventures and Cordoba Investments
Limited (the "Principal Agreement")  to acquire a 51% interest in B.C.
Ventures Limited ("BC Ventures") (the "Option"). BC Ventures is the owner of a
highly prospective lithium project in Southwest Zimbabwe (the "Kamativi
Lithium Project") and two gold licenses (the "Bulawayo Gold Project") close to
Bulawayo (the "Projects") through its wholly owned Zimbabwe subsidiary
Sinamatella Investments (Private) Limited.

 

Technical Highlights

·     Kamativi Lithium Project

  The  Kamativi Lithium Project comprises EPO 1782 and lies on the Kamativi
Belt directly adjacent to, and along strike from the historic Kamitivi
tin-tantalum mine which operated from 1936 to 1994, where there are active
plans by the Zimbabwe Mining Development Corporation to produce lithium from
mine tailings

  First-pass grab sampling within the project area by GeoQuest, who are  a
fully independent Southern and Central African based geological consultancy
and contracting group, has confirmed lithium-bearing minerals in pegmatites
based on preliminary AAS and XRD results and the ground is considered highly
prospective for pegmatite-hosted lithium and associated mineral, past
exploration having focussed on tin and tantalum.

  There is extensive historical raw and exploration data on the Lithium
Project and work will commence with the objective of drill testing as soon as
targets have been prioritised.

·     Bulawayo Gold Project

  The Bulawayo Gold Project comprises EPO 1783 and EPO 1784 and covers a
large 1,300 sq km licence area near Bulawayo with extensive Greenstone Belt
rock formations that are host to many small to mid-size quartz reef gold mines
and deposits in Zimbabwe.

  The Bulawayo Gold Project licences have good prospectivity for extensions
of known gold deposits based on an initial assessment by Geoquest, as well as
new discoveries under thin sand and rock cover using modern exploration
techniques as there has been no systematic exploration for over 25 years.

  Recent grab samples undertaken by Geoquest on the licence area report assay
values ranging from 3.9 - 16g/t Au.

  The target is to explore for resources to support the development of a
large scale mine.  The licences adjoin and enclose a number of small scale
gold mines on pre-existing mining permits which provides the opportunity to
integrate the production from these operations which have a total historic
production reported as more than 1Moz Au.

  Galileo plans to integrate multiple regional datasets to focus exploration
on drill targets with potential for high-grade 'reef' deposits and/or bulk
mining potential of a cluster of such deposits.

Transaction Highlights

·     Under the Principal Agreement;

  the Option is for Galileo to earn an initial 51% interest in the Gold and
Lithium Projects in Zimbabwe by spending US$1.5m on exploration and evaluation
by 21 January 2024 and paying US$100,000 to BC Ventures by 7 March 2022; and

 

  GeoQuest who are an independent southern and Central African based
geological ( mineral exploration) consultancy and contracting group will
conduct the exploration overseen by the technical committee which will
comprise 2 representatives from Galileo, 2 from BC Ventures and be chaired by
one of the Galileo representatives.

 

·     Under the Deed of Assignment Galileo will issue 13,741,609 Galileo
shares (the "Consideration Shares") based on the 5 day VWAP on the date of
this announcement being 1.1pence to settle £150,000 due to Cordoba for
assigning their rights and obligations under the Principal Agreement
containing the Option to Galileo. The Consideration Shares are subject to the
lock up and orderly market arrangements detailed below.

 

Colin Bird Chairman & CEO said: "This is a significant investment for
Galileo, in that we have an option to acquire a controlling interest in what
we consider an highly prospective lithium project in Southwest Zimbabwe.  The
project is adjacent to the Kamativi Mine, which produced tin for many years,
closing in 1994.  The pegmatites in the area are known to contain lithium
bearing minerals, as well as tantalum and tin and the pegmatites will be the
focus of our exploration programme.

 

In addition, we have an option to acquire a controlling interest in two gold
licences, which are in the midst of small producing gold mines near Bulawayo,
where we have a good understanding of the structural controls and believe
there is a propensity for a significant new gold discovery, notwithstanding
the opportunity to small scale mine in the short term.  This is our first
foray into Zimbabwe, where foreign investment is being welcomed and the
country has excellent potential in many commodities as well as good
infrastructure support."

 

Summary of Transaction

On 21 January 2022, Cordoba and BC Ventures entered into an option agreement
(the "Principal Agreement") which provided Cordoba with an option to acquire
51% of BC Ventures  by funding US$1,500,000 of exploration expenditure within
2 years for BC Venture's 100% owned Zimbabwean subsidiary  Sinamatella
Investments (Private) Limited ('Sinamatella') holds three Exclusive
Prospecting Orders ('EPOs') No's 1782, 1783 and 1784 in the Kamativi Regional,
'Bulawayo North' and 'Bulawayo South' areas in the Republic of Zimbabwe. EPO
1782 is primarily prospective for lithium (tantalum, niobium, tin, tungsten,
REE's and copper) whilst EPO5 1783 and 1784 are primarily prospective for
gold.  The three EPOs were issued on 12 March 2021 and have a term of 3
years.

 

On 4 March Galileo entered into a Deed of Assignment with Cordoba and BC
Ventures (the "Deed of Assignment") under which Cordoba has assigned all its
rights and obligations under the Principal Agreement to Galileo for £150,000
which is being settled by the issue of 13,741,609 new ordinary Galileo
Resources plc shares which will rank pari passu with existing Galileo
Resources plc shares and will be subject to the lock up and orderly market
arrangements described below under the heading Lock up and orderly market
arrangements in relation to the Consideration Shares.

 

Kamitivi Lithium Project

Zimbabwe is recognised as one of the most prospective countries in Africa for
pegmatite-hosted lithium. Prospect Resources Ltd (ASX: PSC) estimates that its
Arcadia open pit lithium deposit, hosted within a stacked series of pegmatite
dykes, contains JORC-compliant proven and probable ore reserves of 37.4Mt,
grading at 1.22% Li₂O and 121ppm Ta₂O₅. China's Zhejiang Huayou Cobalt
recently announced that it had agreed a deal to purchase 100% of the project
for US$422m.

 

Adjacent to the Lithium Project area, the Kamativi mine operated from 1936 to
1994, producing 37,000 tonnes of tin and 3,000 tonnes of tantalum ore from
pegmatites. In 2018 Chimata Gold Corp (Zimbabwe Lithium Company) announced a
new JORC (2012) compliant Indicated Mineral Resource of 26Mt @ 0.58% Li(2)O
within the Kamativi mine tailings, confirming that the mine contained
significant quantities of lithium.

 

Sinamatella's 520km(2) licence area in western Zimbabwe encloses extensions
and splays of the Kamativi Tin Mine host unit, including mapped pegmatites. It
has been reported by  whom  in  when  that there are old tin-fluorite workings
within the Sinamatella property and recent grab samples from the west of
property report lithium in old mica-tourmaline workings, confirming the
potential for new lithium discoveries. Little new exploration has been carried
out in the past 25+ years.

 

The licence area also contains a large extent of the pre-Cambrian Malaputese
Formation which is considered to be strongly prospective for VMS hosted
copper, surrounding the old Gwaii River Copper Mine and including numerous
other copper prospects and occurrences.

 

Very good historical raw data and baseline information datasets exist and are
available to be used to advance the Lithium Project.

 

Galileo plans to integrate the multiple regional datasets to focus exploration
on recorded zones containing numerous large pegmatites and quartz veins within
the highly prospective Kamativi Belt, as well as contact zones with
surrounding granites and gneisses with old tin workings.

 

 

Bulawayo Gold Project

Zimbabwe has long been a significant gold producer, primarily from Greenstone
Belt quartz 'reef' deposits. The largest current producer is Caledonia Mining
Corporation Plc from its Blanket Gold Mine
(https://www.caledoniamining.com/operations/blanket-gold-mine/) , which
currently operates at a depth of about 750m below surface on multiple ore
shoots and produced approximately 55,000 ounces of gold in 2019. A new
deepening of the mine will raise production to 80,000 ounces from 2022 and
extend mine life. To date, in excess of 1 million ounces of gold have been
produced from the property.

 

The Sinamatella contiguous licences cover a large 1,300km(2) area near
Bulawayo in west-central Zimbabwe. They cover highly prospective Greenstone
Belt geology with several past producing small to mid-size gold mines, with
production reported totalling >1Moz Au, e.g. Queens Group (440,000 oz Au at
6-20g/t), as well as many smaller occurrences.

 

Sinamatella's licences enclose the area of these mines, although some of the
mines and advanced prospects are covered by pre-existing mining permits;
however, other  known gold mine prospects and potential strike continuations
lie within the Sinamatella ground.

 

Gold typically occurs in quartz 'reef' and shear zone settings. No systematic
exploration has been carried out for more than 25 years due to the previously
unfavourable investment climate in Zimbabwe during that time. Prospective
areas with thin sand/alluvial/Karoo basalt cover have never been explored.
Recent grab sampling on the property by GeoQuest reports assays ranging from
3.9-16g/t Au, confirming the prospectivity of the ground.

 

As with Kamativi, there is excellent potential for integration of multiple
regional datasets to focus exploration on priority targets. Galileo will
undertake this work through GeoQuest  which has such datasets available and
can manage exploration in Zimbabwe for Galileo.

 

 

Summary of Principal Agreement which has been assigned to Galileo such that
the rights and obligations of Cordoba under the Principal Agreement have been
assigned to Galileo

The Principal Agreement was entered into between Cordoba and BC Ventures on 21
January 2022  and has the following terms:

 

i.     Cordoba was given an exclusive option to earn a 51% interest BC
Ventures by;

a.    making a payment of US$50,000 within 10 days of signing (which has
been paid) and a further US$100,000 within 45 days of the Principal Agreement
which has not been paid and is due to be paid by 7 March 2022; and

b.    spending a minimum of US$1.5 million (net of any due diligence,
legal, or administrational fees) on exploration works on the Projects within a
maximum of 24 months.

 

ii.    Once the Option has been exercised, BC Ventures and its Projects
shall be re-valued by an independent 3rd party to be agreed by both parties
prior to any new money being raised or injected into the Company. The original
shareholders of BC Ventures will subsequently contribute pro-rata to
exploration funding above and beyond the initial US$1.5 million or dilute
their respective shareholding in BC Ventures and the Projects via a
straight-line dilution formula.

 

iii.   The original shareholder of BC Ventures shall have the right, at any
time from the date of the agreement, to convert up to 29% of their
shareholding in the Company into publicly listed company shares in accordance
with a valuation conducted by an independent 3rd party to be agreed by the
parties. The original shareholders of BC Ventures will, however, retain a
minimum shareholding of 20% in BC Ventures and the Projects through into
production or sale.

 

iv.   Should a bone fide independent 3rd party offer to acquire BC Ventures
or any of its Projects then both parties shall have 'tag along and drag along'
rights.

 

v.    Neither party may sell its interest in BC Ventures or the Projects
without first offering its interest to the other party (the 'Offeree'). The
Offeree shall have 45 days to exercise its pre-emptive rights.

 

vi.   A technical and operational management committee will be formed with 2
representatives from each party and the chairman to be nominated by Cordoba;

 

vii.  The Parties commit to carrying out all geological (mineral exploration
and evaluation) works in accordance with international best practice (i.e.
with the latest International JORC, N143 101, SAMBEC or PERC Codes governing
the industry) with the work to be carried out by GeoQuest who are an
independent southern and Central African based geological ( mineral
exploration) consultancy and contracting group.

 

viii.                The Parties agree that should the
Projects, at any stage, fail to meet ongoing prospecting criteria, they will
be returned in their entirety to the original shareholders of BC Ventures.

 

 

Summary of Deed of Assignment under which Galileo has been assigned all
Cordoba's rights and obligations under the Principal Agreement

The Agreement was entered into on 4 March between Cordoba as Assignor, Galileo
as Assignee and BC Ventures as the Continuing Party the has the following
terms:

 

i.              Cordoba assigns to  Galileo Cordoba's Future
Rights and Future Obligations under the Principal Agreement

 

ii.             BC Ventures has consented to the assignment and
assumption evidenced by the Deed and confirmed the Principal Agreement remains
in full force and effect;

 

iii.            confirms the initial payment of US$50,000 due under
the Principal Agreement has been paid by Cordoba but the payment of US$100,000
due on or before 7 March  has not been paid;

 

iv.           confirms BC Ventures and Sinamatella are in good
standing, and have no liabilities, and that Sinamatella owns the Project
licences;

 

v.            Recognises that the BC Ventures and the Galileo have
various mining projects and may in the future participate for their own
account in mining projects inside and outside the Republic of Zimbabwe
separate from their participation in the exploration and development of the
Projects and agrees  Galileo and BC Ventures agree to work closely in the
utmost good faith towards one another all projects within 25 kms of the
boundary of any of the Projects  shall be registered to Sinamatella and
included as an additional project the subject of the terms of the Principal
Agreement

 

vi.           Galileo and  BC Ventures agree that the valuation of
the BC Ventures on the date of the Deed of Assignment is US$2,941,176 and this
valuation shall be a starting reference valuation prior to any new valuation
being made as per the Principal Agreement if a) the original shareholders of
the BC Ventures wish to sell up to 29% of their 49% shareholding in the BC
Ventures which is not subject to the option in the Principal Agreement and b)
the Galileo wishes to purchase up to a 29% shareholding in the BC Ventures
from the shareholders of the BC Ventures.

 

Consideration under Deed of Assignment: Galileo shall issue to Cordoba, or its
nominees, £150,000 of Galileo shares (the "Consideration Shares") based on
the 5 day VWAP of the Galileo's share price on the date of this announcement.

 

Lock up and orderly market arrangements in relation to the Consideration
Shares: The Consideration Shares are to be the subject of the following lock
up and orderly market arrangements and cannot be sold during the lock up
periods. During the orderly market period shall first be offered for sale by
the Galileo's company broker at a price no lower than the shares have traded
in the previous 5 days (the "Nominated Price") and if not sold by the
Galileo's company broker within 10 business days may be sold via another
broker at the Nominated Price or higher.

 

 Percentage of Consideration Shares  Lock up period                          Orderly Market Period
 10%                                 No Lock Up                              Until 4 months from the Effective Date
 45%                                 Until 4 months from the Effective Date  Until 8 months from the Effective Date
 45%                                 Until 8 months from the Effective Date  Until 12 months from the Effective Date

 

Further information in relation to BC Ventures: BC Ventures is privately
owned and registered in the Bahamas and was established as a mineral
exploration (prospect generator) company and has remained dormant until the
current date and has never traded or operated commercially and owns 100% of
Sinamatella Investments (Private) Limited ("Sinamatella").  Sinamatella was
incorporated in Zimbabwe to apply for mineral exploration licenses and was
awarded Exclusive Prospecting Orders (EPOs) 1782, 1783 and 1784 on 12 March
2021 which are its only assets. Since the issue of the EPOs Sinamatella have
paid the EPO application and initial year's licence fees of Zimbabwe Dollars
119,896 (approx. US$1,000).

Application to trading on AIM: Application will be made to the London Stock
Exchange for a total of 13,741,609  new Galileo Shares to be admitted to
trading on AIM which rank pari passu to the existing ordinary shares in the
Company. It is expected that Admission will become effective and that dealings
in the new Galileo Shares will commence at 8.00 a.m. on or around 10 March
2022.

On Admission, 1,110,688,453 Ordinary Shares (the "Enlarged Share Capital") may
be used by shareholders in the Company as the denominator for the calculations
by which they will determine if they are required to notify their interest in,
or a change to their interest in, Galileo under the Financial Conduct
Authority's Disclosure Guidance and Transparency Rules.

 

 

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

 

 "Au"                          Gold

 "basalt"                      A fine-grained volcanic rock with low silica content

 "fluorite"                    A mineral of composition CaF2  common in some base metal deposits

 "gneiss"                      Metamorphic rock, often of granitic origin

 "granite"                     A medium to coarse grained granular acid intrusive rock

 "Greenstone Belt"             Zones of variably metamorphosed mafic to ultramafic volcanic sequences with
                               associated sedimentary rocks that occur within Archaean and Proterozoic
                               cratons between granite and gneiss bodies

 "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)

 "Karoo"                       Sequence of rocks of Palaeozoic to Mesozoic in age, defined in southern Africa

 "mica"                        A platy, flexible mineral which is a common constituent of igneous and
                               metamorphic rocks

 "Mt"                          Million Tonnes
 "ore-shoots"                  High-grade mineral zones, usually occurring as steeply-dipping zones along
                               veins or faults

 "pegmatite"                   Very coarse-grained igneous rock which commonly occurs as dykes in granite
                               intrusions

 "Pre-Cambrian"                Referring to the period in Earth's history before 570 million years ago
 "Probable Ore Reserve"        A 'Probable Ore Reserve' is the economically mineable part of an Indicated,
                               and in some circumstances, a Measured Mineral Resource. The confidence in the
                               Modifying Factors applying to a Probable Ore Reserve is lower than that
                               applying to a Proved Ore Reserve (JORC 2012)

 "Proved Ore Reserve"          A 'Proved Ore Reserve' is the economically mineable part of a Measured Mineral
                               Resource. A Proved Ore Reserve implies a high degree of confidence in the
                               Modifying Factors (JORC 2012)

 "quartz"                      A mineral composed of silicon dioxide, SiO2.

 "reef"                        Mineralised rock, particularly gold bearing quartz.

 "shear zone"                  Plane of failure in faulted body of rock

 "tourmaline"                  Silicate mineral containing sodium, aluminium and boron

 "VMS"                         Volcanogenic Massive Sulphide - a class of massive or semi-massive

                               sulphide deposit hosted in volcanic or volcaniclastic rocks

 

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