TIDMGLR
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 The JV Agreement provides Galileo the right to
Initial JV earn an initial 75% interest in a special purpose
Period and joint venture company (the "JV Company") to be
5M Galileo established under Zambia law to, with Ministerial
shares to Consent, acquire the Licence, and the technical
earn 75% JV information and other information and assets related
Interest 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
GBP350,000.
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Further project During the Initial JV Period Galileo will conduct
assessment further due diligence in relation to the Luansobe
during Initial Project and may at its sole discretion at any
JV Period 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.
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Technical Galileo has undertaken to commence raw data investigation
management of the technical information available in relation
of JV 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.
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Project near T he Luansobe prospect is situated some 15km to
giant Mufulira the northwest of the Mufulira Mine site, with
copper mine 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.
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Very prospective The Company has access to historic non JORC compliant
historic studies 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
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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
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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 The Luansobe Project's location in Zambia relative
Project 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 (a) By entering into the JV Agreement the parties
period 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 (a) Galileo has to pay the initial payment of
by Galileo 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 Upon payment of the Second JV Payment Galileo
Galileo Shares is to issue 5,000,000 (Five Million) Galileo
& lock up 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 The Vendor has made warranties in relation to
by Vendor 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 (a) Galileo is to undertake to commence a raw
management of data investigation of the technical information
JV 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 (a) If a decision to mine is made by Galileo
to Mine and (a "Decision to Mine"), then the parties will
funding 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 Mine to develop a mine and will 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
of cashflows debt ( indicative of the 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
of sale project and / or the JV Company after the Second
JV payment the gross sale proceeds will be 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
of Licence the Licence in good 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 It is agreed by the parties that upon establishment
on establishment of the JV Company the parties will enter into
of JV Company 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 Both parties shall from the signing of this
rights 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
Roland Cornish/James Biddle 3396
---------------------------------- ----------------------
Novum Securities Limited - Joint
Broker
Colin Rowbury /Jon Belliss +44 (0) 20 7399 9400
---------------------------------- ----------------------
Shard Capital Partners LLP - Tel +44 (0) 20 7186
J oint Broker 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 That part of a Mineral Resource for which
Resource" 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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END
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