Nkwe signs $14m deals with Xstrata, Sage

07/08/2008 - 09:35

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West Perth-based Nkwe Platinum has signed exclusive option agreements valued at nearly $A14 million with global mining company Xstrata and Leederville-based International Goldfields Ltd over several African projects.

Nkwe signs $14m deals with Xstrata, Sage

West Perth-based Nkwe Platinum has signed exclusive option agreements valued at nearly $A14 million with global mining company Xstrata and Leederville-based International Goldfields Ltd over several African projects.

Nkwe, along with its South African partner Genorah Resources, announced it had entered into a $US10 million ($A11 million) option deal with Xstrata for it to acquire a 50 per cent stake in five platinum group metals properties.

The option is exercisable after the completion of a bankable feasibility study, expected to be wrapped up at the end of 2009.

The properties have a resource base of over 20 million PGM ounces and have the potential to achieve an annualised production rate of 1 million PGM ounces.

On exercise of the option, Xstrata will hold a 50 per cent stake in the properties while Nkwe and Genorah will collectively hold the remaining interest.

"Following the exercise of the option, Xstrata will fund the total development costs of the properties from mining through to concentrating," Nkwe said in a statement.

"The joint venture will extend to any contiguous properties currently (or in the future) under the control of any of the parties."

Meanwhile Nkwe and Genorah are set to acquire International Goldfields' 15 per cent interest in three South African farms, known as Tubatse, which are part of the properties under the Xstrata deal.

Nkwe and Genorah already hold an option to acquire a 59 per cent interest in Tubatse, and under the International Goldfields deal, now have the choice of increasing that to 74 per cent.

Under the option deal, Nkwe will pay International Goldfields an option fee of $A100,000 and issue 2.5 million fully paid Nkwe shares.

Shares in Nkwe, which were previously in a trading halt, last traded at $1 at 11:43 AEST.

 

Below is the full announcement:

Nkwe Platinum Limited ("Nkwe"), its black empowerment partner and major shareholder Genorah Resources ("Genorah") and Xstrata South Africa ("Xstrata") have signed a binding heads of agreement granting Xstrata an exclusive option (the "Option") to acquire a 50% interest in five PGM properties (collectively the farms Hoepekrantz, Nooitverwacht, Eerste Geluk, Garatouw and De Kom) situated on the Eastern Limb of the Bushveld Igneous Complex ("the Properties"). A valid New Order Prospecting Right has been granted over the Properties by the Department of Minerals and Energy.

Nkwe and Genorah are currently conducting a Bankable Feasibility Study ("BFS") over the Properties and have already delineated a significant resource base of over 20 million PGM ounces, with an independently assessed target mineralisation base of approximately 100 million PGM ounces. The Properties have the potential to achieve an annualised production of one million PGM ounces.

The Option is exercisable following the completion of the Bankable Feasibility Study, expected to be completed by the end of 2009, and is subject to the grant of the necessary regulatory approvals. On exercise of the Option, Xstrata will acquire a 50% participation interest in the Properties from Nkwe and Genorah.

The parties will form a joint venture, in which Xstrata's interest will be 50%, while Nkwe and Genorah will collectively have an interest in the remaining 50%. The joint venture will develop the Properties, and will undertake a further feasibility study into downstream processing, to develop an integrated mine to market business. Following the exercise of the Option, Xstrata will fund the total development costs of the Properties from mining through to concentrating. The joint venture will extend to any contiguous properties currently (or in the future) under the control of any of the Parties, (over and above the Properties referred to above).

"Nkwe is pleased to have reached this equitable arrangement with Xstrata, in terms of which Xstrata secures potential access to quality assets in the highly prospective Eastern Limb held by Genorah, while Nkwe stands to benefit from Xstrata's technical and commercial expertise to realise its strategy of developing its substantial resource base to produce one million PGM ounces per annum and access the entire value chain from mining through to processing" said Nkwe Managing Director Maredi Mphahlele."

Xstrata Alloys Chief Executive Peet Nienaber commented;

"This transaction provides Xstrata with entry into the prospective Eastern Limb region and access to a significant, continuous PGM block. The joint development of these properties with Nkwe and Genorah, together with a downstream processing operation, will provide significant growth in mined production and refining for all partners, helping to establish Nkwe/Genorah as an independent, integrated producer of scale and adding further growth potential to our rapidly developing platinum business."

Option to Acquire IGC 15%

Nkwe has entered into an exclusive Option Agreement with IGC in relation to IGC's 15% interest in the three Tubatse farms which form part of the properties the subject of the Nkwe/ Genorah /Xstrata joint venture referred to above.

The JORC-compliant resource on portions of Nooitverwacht 324KT and Eerste Geluk 327KT was recently upgraded from 12.4Moz to 20.4Moz (3PGE + Au). The mineralisation potential of the Tubatse Project is independently estimated at approximately 60Moz 3PGE + Au (this includes the 20.4Moz JORC-compliant resource).
Upon exercise of the option by Nkwe, Nkwe and IGC agree to facilitate the acquisition of the 15% interest in the Tubatse Project by way of a scheme of arrangement (i.e. cash and/or share offer to acquire all of the issued share capital of IGC).

The purchase price payable will be agreed using two (2) independent expert's valuations as an initial basis. If a scheme of arrangement is not implemented, Nkwe and IGC agree to pursue the sale of the 15% interest in the Tubatse Project by way of an asset sale. Settlement will be conditional on the receipt of all necessary governmental, regulatory, shareholder and third party approvals and consents.

Nkwe already holds an option with Genorah to acquire a 59% interest in the Tubatse Project. The option agreement with IGC provides Nkwe with the option to increase its participating interest in the Tubatse Project to 74%, subject to the receipt of necessary shareholder and regulatory approvals. Genorah holds the remaining 26% interest in the Tubatse Project.

Under the Option Agreement, which is valid for 6 months (with Nkwe being able to extend the option for a further 6 months) Nkwe will pay IGC an Option Fee of A$100,000 and issue 2.5 million fully paid ordinary Nkwe Platinum shares.

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