Perth-based Volta Mining, headed by former DMC Mining founder and managing director David Sumich, is venturing into central West Africa with the acquisition of its first iron ore project.
The company, which is already exploring for gold in West Africa with projects in Burkina Faso, has agreed to pay USD350,000 and issue five million company shares for the exclusive iron ore exploration licenses on the Mbombo project.
The transaction will also see a further five million shares issued if initial exploration indicates more than 500 million tonnes of ore – taking the total transaction value to just under $3 million.
News of the acquisition resulted in Volta shares increasing 18 per cent since Friday to 32 cents a piece this morning. At 10:43 AEST they were 30 cents a share.
The project lies south of the Belinga four billion tonne iron ore deposit, which BHP Billiton was speculated to be taking over from China Machinery Engineering Group.
Volta Mining managing director David Sumich said the acquisition was driven by a desire to diversify the company’s commodity holdings.
“We are very excited to have been granted the Mbombo iron ore project as the project is not only highly prospective for iron but, importantly, it is served by alternative transportation options.”
The licence area lies about 30 kilometres from a bulk haulage railway line being used to transport manganese about 600 kilometres to the Owendo Port.
Much of the Volta Mining executive staff are previous DMC mining executives, which undertook early exploration of the Mayoko deposit in the Republic of Congo.
The deposit was subsequently sold to Cape Lambert Resources and then on to African Iron, which was taken over by Exxaro Resources earlier this year.
Mr Sumich said he hoped DMC Mining’s experience would pay off in the new acquisition.
“We hope to not only replicate the success achieved at DMC Mining but to build on it creating significant value for shareholders.”
The company has begun exploration with a field team on the ground and expected to achieve the first exploration target within six months.
Funds gained through a $2.5 capital raising in May will pay for the initial exploration, as well as the company’s coinciding activity in Burkina Faso.
