REG - Kendrick Resources - Acquisition of New Licences

Kendrick ResourcesAnnouncement

07/08/2023 07:00

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RNS Number : 4291I  Kendrick Resources PLC  07 August 2023

 

7 August 2023

 

Kendrick Resources Plc

("Kendrick" or the "Company")

 

Acquisition of New Nickel - Copper - PGM licences in Sweden.

 

Kendrick Resources Plc (LSE: KEN), a mineral exploration and development
company with vanadium, nickel and copper projects in Scandinavia is pleased to
announce the signing of a Share Sale and Purchase Agreement with EMX Royalty
Corporation (EMX) to acquire 100% of EV Metals AB a Swedish company that owns
the Njuggtraskliden and Mjovattnet exploration licences (the "Swedish Nickel
Projects") hosting drill-defined magmatic nickel-copper-cobalt-platinum group
metal mineralisation along the Swedish "Nickel Line".

 

Swedish Nickel Projects Highlights

 

Mjovattnet Licence

·    2 drill-defined zones of mineralisation (Mjovattnet and Brannorna
Prospects)

·    15km of prospective strike

·    PGE value historically overlooked

·    Mjovattnet in-house non-JORC compliant drill-defined resource of
0.17Mt @ 1.29% Ni, 0.19% Cu & 0.02% Co

·    Open at depth

·    Peak shallow drill intercepts for the Brannora Prospect include:

 

 Hole          From   To      Width  Ni

 (Brannorna)   (m)    (m)     (m)    (%)
 BRA-75015     65.80  77.40   11.60  0.82
 BRA-07001     59.00  84.73   25.73  0.58
 BRA-77024     40.30  68.00   27.70  0.64
 BRA-07002     29.30  105.48  76.18  0.60

 

Njuggtraskliden Licence

·    Historic non-JORC compliant mineral Resource of 0 575 Mt @ 0.71% Ni,
0.26% Cu & 0.04% Co

·    10km of prospective strike

·    Mineralised system remains open at depth

·    Drill-defined nickel sulphide mineralisation developed along more
than 10km of strike extent

·    Peak shallow drill intercepts at Njuggtraskliden include:

 

 Hole       From    To      Width  Ni    Cu    Pt      Pd      Au

            (m)     (m)     (m)    (%)   (%)   (ppm)   (ppm)   (ppm)
 NJU07001   63.40   87.75   24.35  1.01  0.51  1.08    0.56    0.14
 NJU79016   15.90   21.69   5.79   1.06  0.31  0.11    0.11    0.05
 NJU79031   66.55   89.56   23.01  1.04  0.60  0.51    0.23    0.02
 NJU82003E  156.75  161.62  4.87   0.65  0.31  0.15    0.88    -
 NJU90006   44.00   56.30   12.30  0.90  0.79  0.30    5.34    0.24

 

·    Swedish Geological Survey report suggests extensions to
mineralisation at depth and along strike at all prospects on both licences.

·    Both prospects host significant massive sulphide mineralisation not
typical of other nickel deposits in the region indicating scope for further
accumulations of locally massive sulphide

·    Located in a nickel-rich district, analogous to the Thompson nickel
Belt in Manitoba, Canada

·    100km by sea from Boliden's Kokkola nickel smelter in Finland

 

Colin Bird, Executive Chairman of Kendrick Resources Plc commented:"

We are delighted with this acquisition, since there are multi metal
occurrences, alongside the nickel, which in its own right is very
attractive.  Particularly because the bodies are sulphide, which are much
sought after.

 

The deposits are well located relative to smelting and end user capacity in
Northern Europe and as such represent an enticing strategic acquisition.
Alongside our vanadium projects in Sweden and our nickel projects in Norway,
we are positioning Kendrick to be ready in the rapidly emerging battery and
energy storage arena.  We look forward to working on these projects from a
geologically sound archive and open system".

 

Consideration

Kendrick are acquiring EV Metals AB for SEK110,780 (approx. GBP 8,200) and the
issue of 15 Million 5 year options to EMX to acquire ordinary shares in the
Company (Kendrick Shares) at 1.3 pence per Kendrick Share (EMX Options) which
is at a premium of approximately 67% to Kendrick's closing share price on 4
August 2023 of 0.7750 pence the last practical date prior to this
announcement.  The EMX Options if exercised will allow EMX to increase its
Kendrick shareholding.

 

Future commitments

·    On or before 13 January 2024, the Company has to pay an annual
advanced royalty of US$30,000 per project to EMX which increases by US$5,000
annually per Project ceasing upon the Commencement of Commercial Production
("Advance Royalty").; and

 

·    On or before 13 May 2024 the Company has committed to one thousand
meter drilling for each of the Swedish Nickel Projects and thereafter annually
ceasing for a project on the date upon which the Company commissions a
Pre-Feasibility Study on the project

 

Royalty Agreement: The Parties shall at closing of the Acquisition enter into
a royalty agreement under which a 3% net smelter royalty is payable to EMX on
commercial production from any of the Swedish Projects. A 1% interest in this
royalty may be bought back in stages for a total cash consideration of
US$1,000,000 on or before the fifth anniversary of the date of the Royalty
Agreement.

 

Exploration and Mining in Sweden

·    Sweden offers a well-established set of mining legislation which was
updated in 2014 and encourages the development of new mines.

 

·    The Country offers low energy costs, a competitive corporate tax rate
for mining and a nominal royalty on production.

 

·    Sweden hosts three world-renowned mining districts in Kiruna,
Skelleftea, immediately adjacent to the Mjovattnet and Njuggtraskliden
Licences and Bergslagen district.

 

·    There are 8 active smelters in the region and accessible deep-water
terminals for ore shipment.

 

·    Sweden has a rich mining culture dating back to the 11(th) Century
and as a result a widespread cultural acceptance of mining.

 

Mjovattnet and Njuggtraskliden Licences

 

Mjovattnet Mineralisation: The Mjovattnet Licence hosts Syn-deformation or
Feeder-style-type nickel copper mineralisation. Graphite inclusions within
ultramafic cumulates, low Se/S ratios in sulphides and trace element
composition indicate composition of parental magma strongly modified during
ascent. Country rock comprises migmatised paragneiss with interbedded
graphitic schist. Intrusive breccia, lack of compositional layering,
brecciated sulphides as offset orebodies result in a complicated intrusive
complex morphology.

 

Mjovattnet Historic drilling was completed by NSG, Outokumpu, SGU, and
Blackstone Resources. Results were reported to the SGU and distributed as a
part of their national drill database and is shown in Figure One shows the
drill defined mineralisation on the Mjovattnet licence.

 

Figure One drill defined mineralisation on the Mjovattnet licence

 

 

The translation of Mjovattnet is "mead water" in English, which was one of the
first nickel sulfide discoveries made along the Nickel Line. Discovered in
1971, the Mjovattnet nickel sulfide deposit occurs along a structural corridor
of similar mineralised bodies, including the Lappvattnet, Brannorna, and
Lappbacken zones to the southwest, each of which have drill defined zones of
mineralization, with the latter two also lying within the Mjovattnet Licence
(Lappvattnet is currently held by a third party).

 

Mjovattnet drill targets: Two targets identified at Mjovattnet, at Brannorna
and Mjovattnet both drill-defined along with boulder occurrences where the
source of the mineralised boulders is yet to be discovered. Figure 1: shows
the Nickel-mineralisation bearing boulders form boulder trains due to the
glacial transport (grey arrows), indicating the location of the potential
source of the mineralisation upward of the ice flow direction.

 

Figure Two: Cross Section through Brannora (Mjovattnet)

Note: Drill intercepts with (*) have a 0.20% cut-off grade, and intercept
without a (*) have a 0.5% cut-off grade. Historic drilling was complete by
NSG, Outokumpu, SGU, and Blackstone Resources. Results were reported to the
SGU and distributed as a part of their national drill database. EMX has not
completed sufficient work to classify the data as compliant with NI 43-101
standards. The data should not be relied on until there are confirmed, however
EMX believes them to be reliable and relevant.

 

Mjovattnet Prospectivity The combination of drill defined nickel sulfide
mineralisation, which remains open in multiple directions, and the upside
potential near the clusters of mineralised boulders makes the Mjovattnet
project particularly attractive for further exploration (See Figure 1:
Nickel-mineralisation bearing boulders form boulder trains due to the glacial
transport (grey arrows), indicating the location of the potential source of
the mineralisation upward of the ice flow direction).

 

Njuggtraskliden mineralisation: The Njuggtraskliden Licence is described as an
open dynamic magmatic wedge-shaped conduit featuring intrusive breccias,
multiple magmatic pulses of mafic and ultramafic composition in a gabbro,
pyroxenite, peridotite host lithology. Mineralisation is made up of massive
and disseminated sulphide mineralisation, veinlets and breccias. As with
Mjovattnet, the country rock is composed of migmatised paragneiss.

 

Njuggtraskliden Historic drilling: Figure Three shows a drill section at the
Njuggs Project and the drill intercepts in the highlights above are from the
Njuggs project.

 

Figure Three shows a drill section at the Njuggs Project.

Note: Drill section adapted from Blackstone Ventures Feb 29,2008 news release.
Note: EMX has not performed sufficient work to verify the published drill data
reported on this slide, and these data cannot be verified as being compliant
with NI 43-101 standards. These historically reported data should not be
relied upon until they can be confirmed. However, the drill-delineated
mineralization as reported in various public documents available online and
from the SGU (Swedish Geological Survey) is considered relevant.

 

Njuggtraskliden Prospectivity: The drill defined zones of mineralisation at
Njuggtraskliden remain open at depth, and the NSG noted in their summary
report that a 10-kilometre corridor of similar boulder clusters with nickel
sulfide mineralisation remains to be explored at Njuggtraskliden. These
occurrences all lie within the Njuggtraskliden Licence and represent
considerable upside exploration potential.

 

Location: The Swedish Nickel Projects are located in east-central Sweden near
Skelleftea, the two licences result from regional nickel exploration
undertaken by the Swedish Geological survey and other state-run enterprises.
Mjovattnet and Njuggtraskliden became known as the "Nickel Line" and the
deposits occur just outside the Skelleftea Mining District, home to Boliden
AB's headquarters and smelting facility. The Mjovattnet and Njuggtraskliden
projects are located in northern Sweden, southwest of Skellefteå as shown in
Figure Four.

 

Figure Four: Location Map for the Mjovattnet and Njuggtraskliden Project
licences

 

 

 

 

Regional nickel exploration became a focus of the Swedish Geological Survey
("SGU") and other state-run mining concerns in the 1970's and early 1980's,
leading to the discoveries of EMX's Mjovattnet and Njuggtraskliden
nickel-copper-cobalt-PGE deposits along what became known as the "Nickel Line"
in north central Sweden. These deposits and occurrences are located just
outside of the Skellefteå Mining District, where Boliden AB has its regional
headquarters and operates a smelting facility.

 

In the past few years, the recent emphasis on conversion to electric vehicles
within the European Union and construction of a vehicle battery factory near
Skellefteå has resulted in renewed interest in the Nickel Line and its
nickel-copper sulfide deposits.

 

Notes from the Swedish Geological Company ("NSG") in 1987 state that
Mjovattnet has only been partly explored and its depth potential remains
unknown. Likewise, several clusters of nickel sulfide bearing boulders lie to
the northeast and southeast (the Frangsmyran, Holmsvattnet, Långbacken and
Vallen occurrences), the bedrock sources of which have yet to be identified.

 

The Njuggtraskliden deposit was discovered in the early 1970's via boulder
tracing, which led to the identification of several mineralised outcrops.
Multiple drill defined zones of nickel sulfide mineralisation were delineated
in the early 1980's, many of which were recognised as being enriched in PGE's,
but only some of the collected drill core samples were analysed for PGE's.

 

Since being drilled by the NSG, a few smaller companies have conducted limited
exploration in the area, including twinning of some of the historic drill
holes and re-analysing some of the historic drill core for PGE's. However,
little or no systematic exploration has taken place.

 

Further information on EV Metals AB

EV Metals AB is incorporated in Sweden. For the year ended 31 December 2022 EV
Metals AB made an audited profit of SEK343,630 (approx.. GBP25,300) due to a
one off intra group charge to the EMX group of SEK646,800 (approx. GBP47.600)
and were it not for this one off intra group charge which will not arise in
the future it would have made a loss of SEK303,170 (approx. GBP 22,300). In
the year ended 31 December 2022 the loss for the year was SEK279,932 (approx.
GBP20,600). As at 31 December 2022 EV Metals had net assets of SEK368,630
(approx. GBP27,116) .

 

Sigdal and Hosanger Norwegian projects

In light of the Company's exploration commitment in relation to the Swedish
Nickel Projects EMX has agreed that in relation to Sigdal and Hosanger in lieu
of the existing requirement to drill up to one thousand meters on each project
if it incurs Exploration Expenditures of no less than USD $50,000 on each of
these projects in 2023 the Company will have met its 2023 expenditure
requirements for these two projects. The Company will have until 31 December
2023 to decide whether it continues with these two projects on the terms of
the existing agreements with EMX. If the Company fails to incur the required
USD $50,000 in Exploration Expenditures on these projects, the shortfall of
the exploration expenditures obligation may be satisfied by a payment to the
EMX of the shortfall in cash.

 

These arrangements in relation to the Sigdal and Hosanger projects do not
affect the Company's Espedalen Project, which currently contains the following
two nickel deposits:

·      Stormyra deposit comprising 1.16Mt @ 1% Ni, 0.42% Cu & 0.04%
Co and classified as Inferred in accordance with JORC (2012)

·      Dalen deposit comprising 7.8Mt @ 0.3% Ni, 0.12% Cu & 0.02% Co
and classified as Inferred in accordance with JORC (2012)

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

 

For additional information please contact:

 

 Kendrick Resources Plc:     Tel: +44 2039 616 086

 Chairman                    Colin Bird

 Novum Securities            Tel: +44 7399 9400

 Financial Adviser           David Coffman / George Duxberry

 Joint Broker                Jon Bellis

 Shard Capital Partners LLP  Tel: +44 207 186 9952

 Joint Broker                Damon Heath / Isabella Pierre

 

Qualified Person The technical information contained in this announcement has
been reviewed, verified, and approved by Colin Bird, CC.ENG, FIMMM, South
African and UK Certified Mine Manager and Director of Kendrick Resources plc,
with more than 40 years' experience mainly in hard rock mining.

 

 

About Kendrick Resources Plc

Kendrick Resources Plc is a mineral exploration and development company with
projects primarily based across Scandinavia. The principle of its business is
to explore the opportunities within the natural resources sector with a focus
on battery, base, and precious metals including but not limited to vanadium,
nickel and copper. In doing so, the Company is looking to build a long-term
energy metals business in Scandinavia which delivers energy metals to Europe
to help enable its renewable energy transformation by building a top tier
energy metals production business.

 

 

 

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