Elemental Minerals Ltd.
Elemental Minerals Ltd.: ACQUISITION OF KASAI DIAMOND/GOLD PROJECT IN THE DEMOCRATIC REPUBLIC OF CONGO
Corporate news transmitted by DGAP – a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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ACQUISITION OF KASAI DIAMOND/GOLD PROJECT IN THE
DEMOCRATIC REPUBLIC OF CONGO
• Company to acquire, subject to certain conditions, the Kasai Diamond and
Gold Project in the south of the Democratic Republic of Congo.
• the Kasai Diamond and Gold Project consists of:
• 7,000 square kilometres in the third largest diamond producing province
in the world
• Diamond rights farmed out to De Beers (Company diluting to 30%)
• Extensive historic alluvial gold production with limited hard rock
exploration to date
• Field work has commenced to identify gold and platinum targets for drill
testing later in the year
• Consideration payable of 13 million shares and 6.5 million options
Elemental Minerals Limited (“the Company”) is pleased to announce the
acquisition, subject to
completion of due diligence and receipt of necessary approvals, of the
Kasai Diamond and Gold project
via the purchase of all the issued shares of Sirocco Resources Limited
(“Sirocco”) from the Sirocco
shareholders (“the Vendors”). The project covers an area of more than 7,000
square kilometres and is
highly prospective for diamonds, gold and platinum.
Project location and tenure
The project is situated in the Katanga and Kasai provinces in the south of
the Democratic Republic of
Congo. The project consists of 30 permits that cover the southern margin of
the third largest diamond
producing province in the world. These 30 permits represent a focussed
selection of a total area initially
acquired of some 20,000 square kilometres. Sirocco (through a wholly owned
subsidiary) is the
registered owner of the permits. Sirocco has a 100% interest in all the
permits, subject to the De Beers
joint venture (refer below) and an obligation to allocate 5% to the
Government on commencement of
mining.
Geological Setting
The Kasai Diamond and Gold Project covers part of the large Archaean
Kasai-Lomami gabbronoritc
lopolith, as well as meta-sediments of the Luizian greenstone belt, which
have been
wedged between the Kasai Shield and the Congo Craton during lower
Proterozoic. The
kimberlites in the region are amongst the largest in the world and lie on
what is believed to be a
set of major crustal sutures extending from Angola through the project area
and Mbuji-Mayi into
Tanzania. These major sutures were intermittently active from the Archaean
to the Cretaceous –
Early Eocene. In addition, seven of the licences cover a portion of one of
Africa’s largest
gabbroic bodies.
Diamond Potential – De Beers Diamond Joint Venture
De Beers entered into a joint venture agreement in February 2005 over all
30 permits to complete
diamond exploration. Sirocco retains the rights to explore for all other
minerals within the project
area. De Beers have to date completed aeromagnetic and gravity surveys over
26 permits and are
now ready to follow up these target areas with detailed ground magnetic and
gravity work.
The principal terms of the agreement with De Beers are:
• De Beers can earn up to a 70% interest in diamond deposits by completing
a prefeasibility
study.
• De Beers is responsible for all exploration expenditure to completion of
a detailed
feasibility study.
• After completion of a detailed feasibility study the Company can either
contribute its
pro rata share of the costs of mine development or dilute its project
interest. The
Company cannot be diluted below a 5% interest.
• De Beers can withdraw at any time after completion of the first work
programme (no
minimum expenditure specified, but agreed programme is designed to identify
and
prove any kimberlites or other primary diamond deposits within the Licence
Areas).
Gold Potential – Historic Exploration Activities
Gold was discovered in the region in the late 1920’s, with alluvial/eluvial
mining activities
commencing in 1932. Total recorded production up to 1958 (when detailed
record keeping
ceased) was approximately 2.5 tonnes of gold. There are a vast number of
alluvial gold
occurrences. Hard rock mineralisation was found prior to 1940 with high
grade free gold within
veins and over significant widths in high metamorphic shear structures,
although limited work
was undertaken. In addition to gold and diamond occurrences, historic
sampling has also
identified anomalous platinum within the project area. The area has not
been explored for 50
years and has never been subjected to modern exploration.
A regional soil sampling programme has recently commenced to determine the
primary source of
the widespread alluvial gold encountered within the project area. The
Company plans to focus on
larger areas of anomalous gold and platinum mineralisation, with the aim of
identifying drill
targets for follow up testing later in the year.
Acquisition Agreement
The principal terms of the agreement for the Company to acquire Sirocco and
Kasai Diamond
and Gold project:
1. Company to acquire 100% of the issued share capital of Sirocco by the
issue to the Vendors
of:
• 13,000,000 fully paid ordinary shares in the Company (“Vendor Shares”).
The Vendor
Shares will be subject to a 12 month voluntary escrow (and any escrow
conditions
applied by ASX); and
• 6,500,000 options (“Vendor Options”). The Vendor Options will be
exercisable at 20
cents each and expire on 31 January 2009. The Vendor Options are of the
same class as
the Company’s currently listed option (ASX code ELMO);
2. The Vendors will have the right to appoint one director to the Company’s
board.
3. The Company has received warranties in respect of the Sirocco corporate
structure and the
exploration interests in the Democratic Republic of Congo that are
generally expected in a
transaction of this nature.
4. Agreement is subject to:
• receipt of necessary approvals, including shareholder approval for the
issue of the
Vendor Shares and Vendor Options;
• Company completing a due diligence review to its satisfaction within 1
month.
The Vendors are not associated with the Company, its Directors or their
associates.
Shareholders will be asked to approve the acquisition at a shareholders
meeting planned for August
2006. The Company is currently preparing the notice of meeting and the
notice will be dispatched to
shareholders in the coming weeks.
The Company also advises that Mr Simon Cato has resigned as a director of
the Company. The
Board thanks Mr Cato for his contribution over the last year.
For further information in respect of the Company’s activities, please
contact:
Reg Gillard, Chairman, Tel: (61 8) 9240 2836 Email: gillardr@crcpl.com.au
Jeremy Whybrow, Director, Tel: (61 8) 9321 3883 Email: jeremy@kirke.com.au
Klaus Eckhof, Director, Tel: (61 8) 9240 2836 Email: eckhofk@crcpl.com.au
Company website: www.elementalminerals.com.au
Scientific or technical information in this news release has been prepared
under the supervision of Klaus Eckhof, a
director of the Company and a member of the Australasian Institute of
Mining and Metallurgy (AusIMM). Mr
Eckhof has sufficient experience which is relevant to the style of
mineralisation under consideration and to the
activity which he is undertaking to qualify as a Competent Person as
defined in the 2004 Edition of the
“Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves” (the JORC
Code).
(c)DGAP 07.07.2006
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