URA purchases Historic Gravelotte Emerald Mine
24/03/2022 07:00
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RNS Number : 8044F URA Holdings PLC 24 March 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU WHICH IS PART OF DOMESTIC UK LAW PURSUANT TO THE MARKET
ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK
MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
24 March 2022
URA Holdings plc
("URA" or the "Company")
URA purchase Historic Gravelotte Emerald Mine, South Africa
URA Holdings plc (LSE: URAH) is pleased to announce that it has signed a Share
Purchase Agreement for the acquisition of G.E.M Venus Holdings (Proprietary)
Limited ("Gem Venus"), the ultimate owner of the majority interest in the
Gravelotte emerald mine ("Gravelotte") located in the Limpopo province of
South Africa from Magnum Mining and Exploration Limited ("Magnum").
Highlights
· Gravelotte is historically one of the largest emerald mines in the
world and was operational from 1929 to 2002 with:
o Total recorded historical emerald production from Gravelotte of nearly 113
million carats
o Largest emerald mine in the world during the 1960's employing over 400
emerald sorters alone
· Magnum recently completed an extensive investigation into all aspects
of the re-commencing of mining activities including conducting trial mining
and processing testwork at Gravelotte
· Magnum estimated a substantial remaining and available resource for
Gravelotte
· Much of the extensive mine site infrastructure has recently been
refurbished and upgraded in preparation for recommencing operations
· Gravelotte is considered ready for the development of staged mining
operations and a medium-term production opportunity
· Extremely favourable terms were negotiated as Magnum is solely
focused on developing its iron ore project in the USA into production
Ed Nealon, Chairman of URA commented: "When the opportunity to secure the
acquisition of the Gravelotte emerald mine recently presented itself, we
immediately seized it. The acquisition fits in perfectly with our stated goal
of identifying unique opportunities in the Southern African mineral sector and
presents a near to medium term production opportunity."
Bernard Olivier, Chief Executive Officer of URA commented: "We are delighted
to have signed the SPA for the acquisition of the world renowned Gravelotte
Emerald mine. Furthermore, the vast majority of the purchase price is to be
paid from future emerald production and sales. We believe that the Gravelotte
mine has significant emerald resources remaining that will enable restarting
and sustaining of the ongoing long-term mining activities. Magnum has
conducted an extensive trial mining campaign in preparation for restarting the
mining activities and URA will now be conducting our own review of all data
with the aim of charting a path towards the recommencing of mining
operations."
In addition to this release, a version of this release can be found on the
Company's website
(https://uraholdingsplc.co.uk/announcements-publications.php)
1. Details of the Transaction
URA has signed a Share Purchase Agreement ("SPA") to acquire 100% of the issued shares in GEM Venus (a company incorporated in the Republic of South Africa) and its subsidiary companies, from Magnum, an Australian public company listed on the Australian Stock Exchange. Through the acquisition of Gem Venus, URA is acquiring a licence giving the rights to exploit the historic Gravelotte (also known as the "Cobra Emerald Mine") mine in South Africa. Gravelotte ceased active mining operations in 2002 for reasons which will be given below but Magnum, the present owners, have in recent years carried out considerable work designed to bring Gravelotte back into production.
The key terms of the acquisition are as follows:
· Conditional additional consideration of AUD200,000.00 (approx.
£123,000) in cash for each 5,000,000 carats of emeralds produced by
Gravelotte up to maximum aggregate amount of AUD2,000,000 (approx.
£1,230,000) as a production royalty
· £100,000 of ordinary shares of URA to be issued at the mid-market
closing price on the date the SPA is signed ("the Consideration Shares").
· Gem Venus owns 74% of the issued share capital of ADIT Mining
(Proprietary) Limited ("ADIT") and Venus Emerald (Proprietary) Limited
("Venus") which hold all the mineral rights in respect of emerald mining and
extraction at Gravelotte. The remaining 26% of the issued share capital of
Adit and Venus are held by a Black Economic Empowerment ("BEE") compliant
structure predominantly consisting of local employees and the local community.
These mineral rights are held through a long-term mining lease agreement
providing all surface access and rights required for ongoing exploration and
development of Gravelotte, including the use of management housing, offices,
staff accommodation, workshop and other existing mine infrastructure on site.
The principal Condition Precedent for the acquisition is the granting of
ministerial consent under The Mineral and Petroleum Resources Development Act
2002. If the Conditions Precedent are not satisfied, waived or extended by the
first anniversary of execution of the SPA, the SPA will terminate. The issue
of the Consideration Shares is subject to satisfaction of the Conditions
Precedent.
The agreement contains the customary warranties concerning the Gravelotte
Project for the benefit of URA including confirmation that there are no
outstanding liabilities.
2. Reasons for Transaction
The Directors of URA believe that the acquisition of the historic Gravelotte
Mine presents an unique opportunity that fits in well with the Company's
stated vision. Gravelotte is considered ready for the development of staged
commercial mining and processing operations and presents a medium-term
commercial production opportunity. Furthermore, the terms of the transaction
allow URA to pay the vast majority of the purchase price only from future
revenue once the mine is back in production.
Although Gravelotte ceased production in 2002 for reasons described below,
there is strong evidence that significant exploitable emerald reserves remain
in place. Since acquiring Gravelotte in 2014, Magnum has carried out extensive
research, planning and restoration work from which URA will benefit. The mine
furthermore comes with the benefit of an experienced operational team already
in place.
In 2021 Magnum acquired the advanced staged Buena Vista pig iron project in
Nevada USA which resulted in a change in management and shareholder control.
Following the change in core activities, Magnum recently announced that at it
is on track to become a leading producer of green pig iron products for sales
to US and export markets at premium prices. Following the acquisition and
development success of the Buena Vista project, that is now Magnum's sole
focus. The decision was made by Magnum to dispose of Gravelotte as quickly as
possible but to do so to a company whose directors and management have the
experience and ability to progress the recommencing of mining at Gravelotte
and bring it back into production. On this basis, it was offered to URA whose
new management have such experience.
3. Emerald Market
Over 75% of the world's emeralds are currently mined from Zambia, Columbia and
Brazil. Emeralds have long been one of the most in-demand and attractive of
the premium-coloured gemstones. The emerald market has experienced some
significant changes during the global covid pandemic, and the future indicates
growing demand, higher prices, and a shift towards ethical sourcing.
In the years before the pandemic, emeralds were a vibrant and steadily growing
gemstone segment. Demand for emeralds was driven by a variety of factors
including the emergence of new customers in China and other Asian markets, a
growing demand for customized high-end jewellery and an increase in online
sales. The increase in online sales is significant as it allowed new
customers, often younger and from emerging wealth centres, to enter the
high-end coloured gemstone market. With the onset of the pandemic, the drivers
of emerald growth accelerated.
Emerald demand is also driven by the increased promotion and marketing of
high-end coloured gemstones as tangible, high-value safe-haven investment.
These safe-haven investments, designed to offer wealth protection in uncertain
economic times and particularly during times of high inflation, allow
investors to diversify away from more traditional investments.
Gemfields Group Limited (LSE:GEM) ("Gemfields") is a world-leading coloured
gemstones producer. Gemfields produces twenty five percent of the world's
emeralds and is listed on the Johannesburg and London Stock Exchanges (AIM).
Gemfields owns the Kagem emerald mine in Zambia, the world's largest emerald
mine. Gemfields markets and sells two grades of emeralds. High-quality
emeralds which are the most premium and commercial emeralds which are lower
grade and more mainstream. The company holds several public auctions of these
commercial and high-quality emeralds each year. Due to its adherence to the
high reporting standards expected of a listed company, the results of
Gemfields emerald auctions tend to act as the bellwether for the global
emerald sector. The Gemfields auction results highlight very steep increases
in terms of price per carat for high-quality grade emeralds, but also very
robust and substantial revenue growth in the sale of commercial (mainstream)
grade emeralds.
The average price per carat for high quality emeralds achieved at auction of
US$150 per carat was almost double the average price of US$68.03 achieved at
auction in November 2018 The pent-up global demand for emeralds is not
only driving prices at the high end of the emerald market. The mainstream
emerald market segment is also experiencing an inability to meet demand and is
experiencing steep price increases per carat. Between May 2019 and April 2021,
Gemfields successfully auctioned 13.8 million carats of emeralds, achieving
revenues of US$ 155.9 million with an average price per carat of US$ 11.27.
Just over 92% of the lots sold during this period were classed as commercial
quality. Commercial quality (lower quality) emeralds sold at auction by
Gemfields in 2018 attained an average price of US$ 3.0 per carat, by mid-2021
commercial quality emeralds were achieving US$ 6.61 per carat at auction.
4. History and Details of Gravelotte Mine
4.1 History
The Gravelotte Mine is located close to the town of Gravelotte in the Limpopo
province of South Africa. The Gravelotte Mine is located in an area with
well-developed infrastructure and other world-class mining operations
including the Consolidated Murchison Mine, the oldest known antimony deposit
in the world, and the Phalaborwa Copper Mine and Refinery.
Emeralds were discovered in the Gravelotte area in 1927 and since then several
companies have mined and explored the area for emeralds. Historical records
indicate that during the 1960's the Gravelotte Project was the largest emerald
mine in the world, employing over 400 sorters.
From 1929 to 2002 the total recorded emerald production from Gravelotte and
the surrounding area was nearly 113 million carats to which Gravelotte
substantially the largest contributor. The Cobra open pit located on the
Gravelotte Mine property is historically the biggest single emerald producing
open pit in the region and is reported to have produced 21 million carats in
the mid-1960's.
Historical records show that the throughput at Gravelotte Project's processing
plant between 1978 and 2002, predominantly fed with material from the Cobra
pit, was 480,000 tonnes averaging approximately 6.2 gramme per tonne (31 carat
per tonne) of exported emerald un-cut rough.
Between 2002 and 2014 the Gravelotte Project went through a period of
ownership disputes and changes with little or no emerald production occurring
during this period. In 2014 Magnum acquired 100% of GEM Venus and through that
acquisition the rights to the Gravelotte Project. The work conducted by Magnum
between 2014 and 2021 is summarised below.
4.2 Geology
The host rocks are 3.3billion year old Archaean greenstone schists enclosed
and intruded by younger Archaean granitic rock and late-stage albite-quartz
pegmatoids. Emerald mineralisation is closely related to the pegmatoids.
The Gravelotte Project area hosts schists that form a star-shaped outcrop
pattern defined by two structural trends and north-east-trending and
steep-sided granite bodies. The emerald-bearing zones are sub-divided into
four main open pits:
· Cobra Pit- comprising Cobra North Pit, Cobra South Pit and Cobra
Underground
· Discovery Pit- comprising Discovery Pit, Discovery East and Discovery
South
· Beryl Kop Pit - comprising Beryl Kop East and Beryl Kop West; and
· Sable Kop Pit
Magnum's recent work has been concentrated on the Cobra and Discovery pits,
where the majority of the most recent emerald production occurred and these
are expected by the Directors to continue to be the areas of focus in the
immediate future.
4.3 Recent exploration work
Since acquiring the project in 2014 Magnum conducted significant exploration
and trial mining and processing work to progress Gravelotte back into
production. On the basis of this work, Magnum also estimated a substantial
existing internal resource for Gravelotte. Their work included:
· Completed a 300-line kilometre low level, ultra-high precision
helicopter-based magnetic and radiometric survey over an area of 12km, centred
on the old emerald workings.
· Completed a topographic survey of the North and South Cobra open pits
and undertook a survey of the tailings dump surrounding the open pits by an
independent surveyor to identify first pass tailings targets.
· Completed a trenching and pitting programme, primarily locating a
number of pits and trenches around the northern area of the Cobra open pit and
its extension to the north. This is an essential part of understanding the
regional geology. A total of 82 holes have been completed during the year down
to a maximum of 3 metres.
· Completed a total of 20 inclined Reverse Circulation drill holes
along two traverses for 769 metres of drilling. The drilling was undertaken at
the northern extension of the Cobra Pit.
· Engaged SRK, the Cardiff-based consulting firm, to consolidate
various geological plans and to undertake a structural survey of both the
Cobra and Discovery and produce a modern geological/structural plan.
· Excavated 12 pits on site in order to map the eastern contact with
the Quarry Granite.
· Commissioned a 300 hectare drone-based topographic survey of the
mining area and carried out through independent consultants geological and
structural mapping of the 3 open pits
· Completed Phase 1 of its Trial Mining campaign with testwork aimed at
evaluating and restarting Gravelotte mining operations by undertaking the
trial mining, milling and processing of the extensive waste and low-grade rock
dumps available at Gravelotte. Extensive testing was also undertaken to
determine the crushing and washing characteristics of the Gravelotte rock.
· Crushing testing successfully determined the optimum crush size to
minimise damage to the emeralds whilst maximising the liberation of the
emeralds from the host rock.
· The Trial Mining Phase 1 trial achieved all of its objectives and
allowed confidence in the final plant design for phase 2 of this operation -
the mining, milling and processing of hard rock from the two existing open
pits at Gravelotte - Cobra North and Discovery pits.
· The Phase 1 programme tested various XRF technologies and the De
Beers Technologies (Deb Tech) X-ray Fluorescence ("XRF") sorter was determined
to be the best XRF processing option.
· In preparation for commercial production much of the extensive mine
site infrastructure at Gravelotte which includes offices, laboratory,
workshops, garages, management accommodation complex and a mine hostel to
accommodate mine workers was upgraded and refurbished.
· Completed Phase 2 trial mining of around 7,800 tonnes of hard rock
from three benches within the historic Cobra pits.
· Conducted sorting and processing testwork on both XRF-based and
Optical sorting based technologies as part of the trial mining process
5. Future Plans
The trial mining and processing programmes conducted by Magnum delivered
critical data as a precursor to determining the specifications and included
capital requirements and operational costs of restarting a commercial mining
operations at Gravelotte
URA will conduct a review of all the available data with the aim of
establishing an operational plan and validating the financial model that will
involve investigation of various operational and production scenarios and
details of all aspects and components required to restart mining operations at
Gravelotte.
URA's overall objective is to complete preparatory work and bring Gravelotte
back into commercial production as quickly as possible. We will keep
shareholders informed of progress as we move towards production.
The person who arranged for the release of this announcement was Bernard
Olivier, CEO of the Company.
- Ends -
For further information please contact:
URA Holdings plc +44 (0)746 368 6497
Bernard Olivier (CEO)
Peter Redmond (Director)
Jeremy Sturgess-Smith (COO)
info@uraholdingsplc.co.uk
Peterhouse Capital Limited +44 (0)20 7469 0930
Lucy Williams
Duncan Vasey
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