The share prices of Kagara Zinc Ltd and Canadian LionOre Mining International Ltd fell today after the giant sold a non-strategic greenfield nickel project to the West Perth company for $25 million.
The share prices of Kagara Zinc Ltd and Canadian LionOre Mining International Ltd fell today after the giant sold a non-strategic greenfield nickel project to the West Perth company for $25 million.
At close of trade, LionOre shares had slumped 6.5 per cent to $10.10, while Kagara had fallen 4 per cent to $6.80.
Nonetheless, Kagara executive chairman Kim Robinson said in an announcement that the portfolio represented an outstanding exploration and development opportunity for the company, and that the acquisition was low cost and low risk.
"This acquisition represents a logical diversification for Kagara into potentially low-cost, low-risk and high-grade nickel sulphide production, complementing our highly profitable north Queensland zinc and copper operations, and continuing the current sustained period of growth for the Company," he said.
LionOre will retain a right to toll treat, process and purchase on commercial terms nickel bearing material derived from the assets being sold, as well as receiving a marketing fee of 1 per cent from the sale of any nickel products coming from the tenement, itindicated in an announcement.
The company said that the sale was in line with a decision to maximise value from non-strategic nickel tenements, but remains conditional on the consent of the company's Australian financiers and normal regulatory consents.
In other news for Kagara, company director Mark Ashley has been appointed to the board of Queensland-based Metallica Minerals Ltd, after Kagara acquired 12 million shares, or 13 per cent of the company earlier this year.
The full text of a Kagara announcement is pasted below
Kagara Zinc Ltd is pleased to announce that it has today reached agreement to purchase the nickel rights to granted mining lease M77/545, which covers the down plunge projection of the various Flying Fox ore bodies currently being developed by Western Areas NL.
These rights have been acquired from LionOre Mining International Ltd for a total consideration of $25 million and the purchase includes a number of other highly prospective tenements throughout the Forrestania Greenstone belt south of Southern Cross in Western Australia. The acquisition represents a logical diversification into potentially low cost, low risk and high grade nickel sulphide
production, which is expected to complement Kagara's very profitable north Queensland zinc and copper operations.
Drilling the potential extensions to the T5 ore body, which Western Areas has drilled to within 30 metres of the tenement boundary, with intersections of up to 21.8 metres at 5.7% nickel and 14.7 metres at 8.1% nickel (see attached longitudinal projection), will commence as soon as a diamond drilling rig is located. Several holes drilled on M77/545 have confirmed the potential of the tenement with a best intersection to date of 4.73 metres grading 7.66% nickel with significant cobalt and platinoid credits. LionOre holes drilled higher up between the down plunge projection of the T1 and T5 ore bodies encountered wide zones of disseminated sulphides assaying up to 0.82% Nickel over a width of 21.05 metres within ultramafic, which further enhances the prospectivity of
this area.
With more than 1 million tonnes at 6.8% nickel already outlined on Western Areas ground, the T5 deposit is a very significant orebody, which remains open at depth and is believed to continue down plunge into Kagara's new tenement. An initial program of 10 diamond drill holes is planned by Kagara to test this potential, and shareholders can look forward to resources being rapidly defined by Kagara as drilling proceeds.
On the operational front, both treatment facilities at Mt Garnet continue to perform strongly and an important milestone will be reached this week with copper concentrate production commencing from the Thalanga treatment plant. Thalanga will ramp up over the next two weeks and produce more than 20,000 tonnes of copper metal per year.
With regard to other developments, the Mungana exploration decline has progressed to 100 metres vertically beneath the portal and is now nearly half way to the top of the Mungana base metal deposit and on 12 November a third decline was collared in the wall of the Balcooma open pit. The Balcooma decline will be providing supplemental lead-zinc ore for the Mt Garnet plant towards the
end of next year and will also provide a drilling platform to test for extensions to the various deeper ore bodies at Balcooma.
With the strong cash flows and profits being projected, and with operational capital requirements comfortably covered by cash flow, your directors are currently looking at implementing a dividend policy. Shareholders should expect an announcement in this regard in the near future.
