“This acquisition together with discussions on acquisition and development funding represents a transformative milestone for the company” Executive Chairman, Mr Peter Landau
Perth, Western Australia (PRWEB) September 08, 2014
- Exclusive Option to purchase high grade direct shipping ore (“DSO”) operating mine and major copper development project in the Republic of Congo (“ROC”)
- Ground holding of 372km2 with granted mining permits encompassing numerous historic mines and advanced exploration prospects
- The two main projects have valid exploitation permits until 2036 one of the projects currently in production
- Moubiri project is a high grade, cash flow positive underground Cu/Pb/Zn DSO operation currently in production
- Most recent shipment of ore graded:
O 6.3% Cu
O 23.1% Pb
O 25.2% Zn
- 2,500 tonne Stockpile of Moubiri DSO at site ready to sell CIF
- Mindouli copper project o Foreign resource estimate and extensive technical work
- AusAmerican is in discussions with a number of parties to provide US$60 million debt off take funding package
Copper and gold focused resource company AusAmerican Mining Limited (ASX: AIW) (“AusAmerican” or “the company”) is pleased to report that it has entered into a binding term sheet for an exclusive option to acquire a 77.58% interest Shenglong International Investment Limited (“Shenglong”), a BVI company that is engaged in exploration and production of copper, lead and zinc in the Republic of Congo (“ROC”).
Further details of the option are set out elsewhere in this announcement and on our website http://www.ausamerican.com.
Shenglong owns 100% of a Congolese company called Societe Lulu De Mine which holds 90% of two Polymetalic exploitation permits titled M’Passa-Moubiri and Mindouli under which rights are granted over a total of 372km2. The exploitation permits are valid until 2036. The other 10% of the projects are owned by the Congolese Government.
“This acquisition together with discussions on acquisition and development funding represents a transformative milestone for the company” Executive Chairman, Mr Peter Landau said. “The Moubiri project is a Cu/Pb/Zn DSO asset currently in production. We believe we can ramp up production in the short term to provide significant cash flow margins for the company. Mindouli is a development project with significant exploration and feasibility work undertaken to date and, importantly, a clear path forward to establish the next stage forward for development. We believe this opportunity represents outstanding value to current and prospective shareholders”.
Unique asset package
The M’Passa-Moubiri and Mindouli exploitation assets that AIW is purchasing are high grade copper and base metal assets located in the Republic of the Congo.
Moubiri – High Grade DSO Operation
The Moubiri project is a structurally controlled Cu/Pb/Zn ore body. Mineralisation is of a direct shipping (“DSO”) quality. Shenglong International currently operate an underground mine which is producing ore at a rate of approximately 50 tonnes per day (tpd).
Two DSO shipments have been completed and delivered to customers in China. The most recent 1,100 tonne shipment returned the following assayed content in line with the grades of the first shipment:
Analysis of the vendor’s historical operating costs indicates that the cost per ton of ore delivered to China is US$150. The revenue generated by each tonne of ore is presently approximately US$625 per tonne, producing a significant margin per tonne.
Moubiri Work Completed and Exploration Target
Shenglong have completed the following exploration work on the project:
- surface geological mapping & sampling,
- 16 diamond core drill holes
- 4 surface trenches
- underground exploration audit and mine development
No drill holes have been assayed as mineralisation is assessed visually for mine planning purposes. Assaying of the drill holes can be done immediately and this is a priority of the company once work commences at the project.
The exploration target at the Moubiri project is 400,000 tonnes to 800,000 tonnes at 4%-6% copper and 30% to 50% combined lead/zinc
This exploration target is based on a review of work undertaken by Shenglong and a site visit completed by AusAmerican. The exploration target is based upon the assumption that mineralisation is 2 to 3 metres wide and is known to occur over a strike length of at 150 to 200 metres and to a depth of at least 200 m below the surface. These dimensions are supported by underground exposure of the ore body, surface geological mapping and the geological logs for 16 diamond drill holes.
The potential quantity and grade is conceptual in nature. There has been insufficient exploration drilling to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource.
The Company has not itself completed any assaying; the grade ranges quoted in the exploration target are based upon independent 3rd party assay results for DSO shipments. The tonnages are estimated by multiplying the approximate dimensions of the deposit by specific gravity determined by comparable deposits. The range of tonnages were generated by a +/- 33% sensitivity.
AusAmerican has commenced a 2 month work program to validate the assumptions used to generate the exploration target, the work program will include:
- geological mapping and sampling of the existing underground exposures of the ore body
- surface geological mapping and geochemical sampling
- geological logging and sampling of the existing 16 drill holes.
Mindouli Copper Project – Significant Copper Project Opportunity
The Mindouli project is a large, high grade sandstone and limestone hosted copper deposit (see figure 4 and 5). High grade mineralisation occurs over a strike length of at least 1.2 kilometres. Mining records show that a French company extracted 47,000t @ 19% copper during the early 1900’s.
The project has been subject to a number of phases of exploration, both surface and underground. Initially the project was explored and
drilled by the BGRM in the 1950’s and further explored by the Bulgarian geological survey in the 1970’s. AusAmerican possess incomplete records of this exploration and is currently compiling the information.
Modern exploration has been undertaken by Shenglong International between 2009 and 2013. The company has completed surface mapping & sampling, 16 drill holes, 9 trenches and underground sampling.
A non JORC compliant foreign resource estimation was completed in 2011 by an Independent Chinese Consulting Company and this was used as basis for a feasibility study. AusAmerican has done limited work to ascertain the reliability of the foreign estimate and the drilling results completed to date. The Company has commenced a significant due diligence work program with management and technical consultants now on site working with Shenglong.
The comprehensive due diligence program will comprise of twinning all historical drill holes, geological mapping and sampling of historical trenches and underground mapping/sampling, with an aim to confirm previous work undertaken including the non JORC resource estimate.
The exploration target at the Mindouli copper project is 15 to 30 million tonnes at 3% to 5% Cu. The exploration target is based upon the assumption that mineralisation is at least 1.2km in strike length. The dimensions are supported by underground exposure of the ore body, surface geological mapping, surface trenching and diamond drill holes as reported and referenced in the 2011 Independent Report.
The potential quantity and grade is conceptual in nature. There has been insufficient exploration drilling to estimate a Mineral Resource and it is uncertain if further exploration will result in the estimation of a Mineral Resource
The company is in discussions with several international trading commodity houses regarding the provision of a US$60 million copper/lead/zinc prepayment facility to AusAmerican to fund the purchase of the assets. Discussions have involved the company providing an exclusive off take agreement for the life of the Moubiri mine in return for providing the company with a pre-payment off take loan of US$60 million. There is no guarantee that the company will be able to secure project financing on favourable terms or at all.
The US$60 million would fund the initial acquisition payment to the vendor of the project (US$49 million) and provide US$11 million in working capital for the company. The working capital will be used to seek to ramp up production at the Moubiri mine as well as to advance the Mindouli project to final feasibility study stage.
The company intends to fund the remaining consideration required to complete the last milestone payments of the transaction from the cash flow from this project. Should the company be unable to raise the initial US$49 million to pay the vendor for the first instalment milestone payment (see point 2 below in timing of payments in section headed Details of the Transaction) the transaction will not proceed.
Details of the Transaction
AusAmerican has entered into a binding terms of agreement to purchase 77.58% of Shenglong International Investment Limited (“Shenglong”), a BVI company that is engaged in exploration and exploitation of copper ore and other minerals in the Republic of Congo (“ROC”), from Mr Zou De Lin (“vendor”). Shenglong owns a Congolese company called Societe Lulu De Mine which holds a 90% interest in two Polymetalic exploitation permits titled Moubiri and Mindouli. The Government of the ROC hold the other 10%. The exploitation permits are valid until 2036.
AIW have entered into an agreement with the vendor to purchase 77.58% of Shenglong by paying three instalments totalling US$103.44 million to the vendor over a 2 year period commencing in August 2014.
For more information about these projects or the Company in general, please visit http://www.ausamerican.com or contact:
+61 8 9488 5220
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