12/03/2009 - 14:38

Rio withdraws from Zambezi joint venture

12/03/2009 - 14:38

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Rio Tinto has pulled out of a uranium joint venture with West Perth-based Zambezi Resources, in what is the minnow's second blow this week.

Rio Tinto has pulled out of a uranium joint venture with West Perth-based Zambezi Resources, in what is the minnow's second blow this week.

The withdrawal from the Mulofwe uranium JV in Zambia by Rio coincides with the mining giant's plan to reduce its global exploration budget to only focus on a few core projects.

Rio first entered the JV late in 2007 with the intention of generating and drill testing targets for uranium mineralisation within the property.

Zambezi said in a statement that work carried out by Rio has advanced the Nkala prospect, located within the JV, and the company intends to drill the identified targets when it has secured its financial position.

Yesterday, Zambezi entered into another trading halt just one day after it came out of a four-month-hiatus. Its shares slumped 63 per cent from 5.4 cents to two cents.

The trading halt was enforced after Zambezi revealed that minerals distributor Astron decided to not go ahead with the second tranche of its transaction, which would have injected $3.4 million into the cash strapped company.

The first tranche consisted of Astron subscribing for $580,000 worth of shares.

"Zambezi regards the notice received from Astron as a repudiation of the subscribed agreement," the company said in a statement yesterday.

"Zambezi remains ready and willing and able to complete pursuant the subscription agreement."

The company, like many of its peers, has had to cut jobs and restructure its asset base to cope with falling commodity prices and demand.

 

 

Today's announcement is below:

 

Zambezi Resources Limited ("Zambezi" or the "Company")
(AIM:ZRL; ASX:ZRL) today announces that it has received notice
from Rio Tinto Mining and Exploration ("Rio") that it has
withdrawn from the Mulofwe Uranium Joint Venture in Zambia.
Rio's withdrawal from the JV took effect as of 9 March 2009.
Rio cites the primary reason for withdrawing from the JV as "a
reduction in global budgets across Rio Tinto Exploration has
forced us to re-examine our portfolio and focus on a few core
projects". Rio entered into the joint venture on the 4 September
2007 with the intention of generating and drill testing targets for
uranium mineralisation within the property.
Initial work by Zambezi highlighted the potential of the project
through detailed airborne radiometrics. Follow up rock chipping
and trenching lead to the discovery of the Nkala Prospect.
Results of this initial radiometric survey showed an anomalous
corridor of elevated radiometric response in excess of 20km in
strike coincident with lithostratigraphic shale units and structure.
Subsequent to the JV being signed in 2007, Rio embarked on a
detailed and focused exploration program consisting of airborne
VTEM, surface mapping, spectral mapping, rock chipping,
trenching, SEM characterisation of selected minerals and
wholerock analysis of selected samples.
The work carried out by Rio has significantly advanced the Nkala
Prospect and identified other new targets with coincident VTEM
conductors and elevated radiometric response within the project
area. As a result of the detailed exploration work carried out by
Rio, collar positions for drillholes have been planned and were
intended for testing by Rio in Q4 2008. It is Zambezi's intention to
drill these targets when the Company has secured its financial
position.

 

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