TIDMAFP
RNS Number : 9938Y
African Pioneer PLC
20 January 2022
20 January 2022
African Pioneer Plc
("African Pioneer" or "the Company")
Zambia projects option agreement
African Pioneer plc ("APP" or the "Company"), the exploration
and resource development company with projects in Namibia, Zambia
and Botswana announces that on 19 January 2022 it and its 80% owned
subsidiary African Pioneer Zambia Ltd ("African Pioneer Zambia")
entered into an option agreement with First Quantum Minerals Ltd
("First Quantum") (listed on the Toronto Stock Exchange FM.TO) in
relation to 4 of the 5 Zambian exploration licences held by African
Pioneer Zambia (the "Option Agreement").
Highlights:
-- The four exploration licences the subject of the Option
Agreement are in the highly prospective Central Africa Copperbelt
in northwest Zambia which is the largest and most prolific
mineralized sediment- hosted copper province in the world and are
located less than 100km from First Quantum's giant Sentinel copper
mine.
-- The exploration licenses include geological formations
similar in age and rock type to that hosting the major copper
deposits of the Copperbelt
-- During the initial 18 month option period First Quantum has
the right but not the obligation to spend US500,000 on each of the
exploration licences 27767-HQ-LEL, 27768-HQ-LEL, 27770-HQ-LEL, and
27771-HQ-LEL (the "Zambian Projects"). At this stage First Quantum
will not have earned any shares in African Pioneer Zambia, just the
right to proceed to take one or more of the properties into the
First Earn In Period by issuing an Option Exercise Notice.
-- During the First Earn In Period, First Quantum then has 2
years when it has the right but not the obligation to prepare a
Technical Report in respect of the Zambian Projects demonstrating
an Indicated Mineral Resource of at least 300,000 tonnes of
contained copper (the "Technical Report Requirement"). First
Quantum is to fund the Technical Report. Once the Technical Report
is issued First Quantum has the right to be issued shares equal to
a 51% shareholding in African Pioneer Zambia. This will also
trigger the Second Earn-In Period.
-- In the Second Earn-In Period First Quantum shall have the
right but not the obligation to complete all necessary mining,
metallurgical and development studies to establish a mine at the
Property and make a public announcement that it intends to proceed
towards commercial development of a Mine on the Property (a
"Decision to Mine"). First Quantum is to fund all costs related to
the Decision to Mine. Once First Quantum announces a Decision to
Mine First Quantum has the right to be issued shares in African
Pioneer Zambia to increase their 51% shareholding in African
Pioneer Zambia to 75%.
Executive Chairman, Colin Bird said:
"We are very pleased that we have entered into this agreement
with First Quantum, which has one of the world's largest copper
mines nearby and has a wealth of exploration, mining and technical
expertise built up over the last 25 years. The exploration areas
are large and are highly prospective not only for copper but also
cobalt in association.
Myself and the team have previous good working experience of the
First Quantum Group and on that basis know that the exploration of
the project will be approached in a highly technical and commercial
way. We will keep the market informed on progress as it
happens."
Additional Information
First Quantum: is one of the world's top 10 copper producers
operating in several countries including Zambia where it owns the
Sentinel and Kansanshi mines in North West Zambia and is known for
its specialist technical engineering construction and operational
skills which have allowed it to develop and successfully run
complex mines and processing plants. Colin Bird, the chairman of
African Pioneer, was a founder of and floated Kiwara Plc in around
2008 which discovered copper in northwest Zambia and was sold to
First Quantum in 2009 for U$260 million. First Quantum then
developed the Kiwara Plc projects into the Sentinel mine which is
the world's 14(th) largest copper mine.
Zambian Projects: The licence package covers part of the
north-western extension of the Zambian Copperbelt. The properties
are located within 80-100km of First Quantum's giant Sentinel
copper mine, one of the largest copper mines in Africa, with
current Measured and Indicated Resources of 891Mt @ 0.45% Cu. They
also lie close to the Enterprise nickel deposit (37.7Mt @ 1.03% Ni)
which is being reportedly moved towards development. This link is
to a map of the Zambian Projects.
The Zambian Projects lie on the Lufilian Fold Belt in the Domes
region of the Central African Copperbelt, straddling the western
boundary of the Kabompo Dome, underlain principally by rocks of the
Lower and Upper Roan, as well as the stratigraphically higher
Kundelungu and Nguba Groups. This geological package is similar in
age and rock type to that hosting the major copper deposits of the
Copperbelt, including Sentinel. Therefore, the licence areas are
considered to be strongly prospective for Copperbelt-type
copper/cobalt and/or nickel deposits. They are historically
underexplored, representing the westerly extension of the
Copperbelt which has not been investigated in detail, as previous
work focussed primarily on the central part of the zone.
On the Luamata South licence (27771-HQ-LEL), African Pioneer has
acquired a valuable exploration package arising from recent work by
MMG Zambia Ltd ('MMG') which highlights strong soil/airborne
magnetic targets that were not drill tested, as MMG pulled out of
Zambia. The Samuteba East licence (27770-HQ-LEL) was recently held
by Anglo American which also carried out airborne magnetic
surveying and reconnaissance soil sampling before exiting the
Copperbelt. The soil data highlights several copper anomalies of
considerable interest.
Exploration licence 27769-HQ-LEL owned by African Pioneer Zambia
which is not covered by the Option Agreement is in the Zambezi area
located within the Zambezi belt of southern Zambia that hosts a
Lower Katanga supergroups succession will be transferred from
African Pioneer Zambia to a new Zambian company to be owned 80% by
the Company and 20% by its local partners.
Summary of main commercial terms of the Option Agreement:
Parties First Quantum Minerals Ltd, the Company, African
Pioneer Zambia and the minority shareholders
of African Pioneer Zambia (the "Minority Shareholders").
-------------------- ------------------------------------------------------------------------------
Initial Expenditure First Quantum has the right but not the obligation
to spend US500,000 on each of the exploration
licences 27767-HQ-LEL, 27768-HQ-LEL, 27770-HQ-LEL,
and 27771-HQ-LEL within 18 months. The 18 months
period is extended a further 6 months for any
of the licences where First Quantum has spent
US$350,000 in the first 18 months. At this
stage First Quantum will not have earned any
shares in African Pioneer Zambia, just the
right take one or more of the properties into
to the First Earn In Period by issuing an Option
Exercise Notice.
-------------------- ------------------------------------------------------------------------------
First Earn-In After sending the Option Exercise Notice, First
Period - Issue Quantum then have 2 years when it has the right
of Technical but not the obligation to prepare a Technical
Report earns Report in respect of the Property demonstrating
First Quantum an Indicated Mineral Resource of at least 300,000
51% tonnes of contained copper (the "Technical
Report Requirement"). First Quantum is to fund
the Technical Report and if it spends US$2M
on this in the 2-year period then it has an
extra year to complete the Technical Report.
Once the Technical Report is issued First Quantum
has the right to deliver the First Earn-In
Exercise Notice and be issued shares equal
to a 51% shareholding in African Pioneer Zambia.
This will also trigger the Second Earn-In Period
-------------------- ------------------------------------------------------------------------------
Second Earn-In In the Second Earn-In Period First Quantum
Period - Decision shall have the right but not the obligation
to Mine earns to complete all necessary mining, metallurgical
First Quantum and development studies to establish a mine
further 24% at the Property and make public announcement
so they own that it intends to proceed towards commercial
75% development of a Mine on the Property (a "Decision
to Mine"). First Quantum is to fund all costs
related to the Decision to Mine. Once First
Quantum announces a Decision to Mine First
Quantum has the right to be issued shares to
increase its 51% shareholding in African Pioneer
Zambia to 75%.
-------------------- ------------------------------------------------------------------------------
Funding once Once First Quantum is at 75% then the parties
First Quantum have to fund pro-rata and if they do not they
at 75% will be diluted. If the joint shareholding
of the Company and the Minority Shareholders
is diluted to 10% then it converts into a 1%
royalty which would be paid 0.2% to the Minority
Shareholders and 0.8% to the Company.
-------------------- ------------------------------------------------------------------------------
Joint Venture Once First Quantum has delivered the First
after First Earn-In Exercise Notice the parties will be
Earn-In Exercise deemed to have established a joint venture.
Notice Prior to the making of a Decision to Mine (which
announcement shall be in the sole discretion
of First Quantum), the allocation of Joint
Venture Expenditure shall be made by the Participants
in proportion to their respective Participating
Interests, provided that First Quantum shall
be responsible for Joint Venture Expenditures
relating to its completion of all necessary
mining, metallurgical and development studies
contributing to the Decision to Mine.
-------------------- ------------------------------------------------------------------------------
Sale restrictions The Company needs First Quantum approval to
sell and must give First Quantum first refusal
rights and First Quantum cannot sell without
the consent of the Company.
-------------------- ------------------------------------------------------------------------------
Tag along rights If First Quantum wants to sell their African
Pioneer Zambia shares to a third party then
the Company and the Minority Shareholders can
require that the third party also buys their
African Pioneer Zambia shares on the same terms.
-------------------- ------------------------------------------------------------------------------
Excluded Licence Exploration licence 27769-HQ-LEL will be transferred
from African Pioneer Zambia to a new Zambian
company to be owned 80% by the Company and
20% by the Minority Shareholders.
-------------------- ------------------------------------------------------------------------------
Representations The parties have made representations & warranties
& warranties customary for an agreement of this nature
-------------------- ------------------------------------------------------------------------------
African Pioneer Plc
Colin Bird
Executive Chairman +44 (0)20 7581 4477
Beaumont Cornish (Financial Adviser)
Roland Cornish +44 (0) 020 7628 3396
Novum Securities Limited (Broker)
Jon Belliss +44 (0) 20 7399 9400
or visit https://africanpioneerplc.com/
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").
Qualified Person:
Technical information in this announcement has been reviewed by
Edward (Ed) Slowey, BSc, PGeo, a technical adviser to African
Pioneer Plc. Mr Slowey is a graduate geologist with more than 40
years' relevant experience in mineral exploration and mining, a
founder member of the Institute of Geologists of Ireland and is a
Qualified Person under the AIM rules. Mr Slowey has reviewed and
approved this announcement.
Glossary
A 'Mineral Resource' is a concentration or occurrence of solid
material of economic interest in or on the Earth's crust in such
form, grade (or quality), and quantity that there are reasonable
prospects for eventual economic extraction. The location, quantity,
grade (or quality), continuity and other geological characteristics
of a Mineral Resource are known, estimated or interpreted from
specific geological evidence and knowledge, including sampling.
Mineral Resources are sub-divided, in order of increasing
geological confidence, into Inferred, Indicated and Measured
categories.
An 'Indicated Mineral Resource' is that part of a Mineral
Resource for which quantity, grade (or quality), densities, shape
and physical characteristics are estimated with sufficient
confidence to allow the application of Modifying Factors in
sufficient detail to support mine planning and evaluation of the
economic viability of the deposit.
"Cu" Copper
"Mt" million tonnes
"Ni" Nickel
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END
AGRBKCBNQBKDNDD
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