TIDMKAT
RNS Number : 9298Z
Katoro Gold PLC
20 September 2022
Katoro Gold plc (Incorporated in England and Wales )
(Registration Number: 9306219)
Share code on AIM: KAT
ISIN: GB00BSNBL022
("Katoro" or "the Company")
Dated: 20 September2022
Katoro Gold PLC ('Katoro' or the 'Company')
KATORO GOLD ENTERS INTO UNINCORPORATED JOINT VENTURE ON
STRATEGIC
IRON PRODUCTION OPPORTUNITY
Katoro Gold PLC ('Katoro' or 'the Company') (AIM: KAT), the
strategic and precious minerals exploration and development
company, is pleased to announce that it has entered into a
conditional agreement ('the Agreement') with Trans Namibian Mining
and Minerals (Pty) Ltd ('TNMM') to undertake
exploration/development activities on TNMM's iron ore project in
Namibia.
Below is an overview of the Agreement and Project. Readers are
encouraged to review the announcement in its entirety, including
the section headed 'Important Information for Shareholders'.
OVERVIEW OF THE AGREEMENT AND PROJECT
Joint Venture
Katoro has entered into a binding conditional agreement to form
a 50/50 unincorporated joint venture ('JV') with TNMM (and together
with Katoro, the 'JV Partners'). The JV seeks to continue the
development of TNMM's iron ore project.
The Agreement provides Katoro with a pre-emptive right to
acquire up to 60% of the total issued share capital of TNMM and the
same percentage of all claims on the shareholder loan account
against TNMM should the shareholders of TNMM decide to sell their
interest in TNMM.
Project Overview
The TNMM Properties comprise the four farms owned by TNMM in
Namibia (the 'Project' or the 'Trans Namibian Iron Ore Venture')
and known as Naruchas, Kanubeb Wes, Kanubeb Oos and Kanubeb. The
most exploration work undertaken to date has been on an iron ore
project based on the Naruchas farm ('Naruchas').
The deposit on the Naruchas farm is being explored for medium-
to high-grade sedimentary iron ore. The iron ore on Naruchas occurs
as a black to dark-grey laminated ore with massive magnetite and
hematite mineralisation.
The JV Partners plan to continue the exploration and potential
development of deposits of iron ore and any other minerals from the
TNMM Properties. TNMM also holds the associated prospecting
licenses issued by the Government of the Republic of Namibia (the
'TNMM Rights'). TNMM is the current operator of the Project and
holder of the rights over 100% of the project.
Historical Estimate
A Historical Estimate of mineral resources at Naruchas, dated
October 2013, was completed by Sheron Kaviua, an independent
consultant to TNMM, in compliance with the SAMREC Code and is
summarised in Table 1. The estimate is defined as a Historical
Estimate by virtue of being prepared before Katoro entering into
the agreement to acquire an effective interest in the property
containing the Naruchas deposit.
In situ In situ Run of In situ In situ
Ore Ore Mine Grades Grades
Category BCMS Mt Mt Fe% Fe(2)
O(3) %
-------- -------- ------- -------- --------
Measured 13.7 61.8 61.8 30.5 43.6
----------- -------- -------- ------- -------- --------
Indicated 5.5 24.7 24.7 30.9 44.1
----------- -------- -------- ------- -------- --------
Inferred 2.9 12.8 12.8 31.9 45.6
----------- -------- -------- ------- -------- --------
Total 22.1 99.4 99.4 30.8 44.0
----------- -------- -------- ------- -------- --------
Table 1: Mineral Resource statement as of October 2013 for the
iron ore project on the Naruchas farm (Kaviuola, S. 2013.).
The source and date for the Historical Estimate is a report
titled: 'Mineral Resource and Ore Reserve Statement' compiled by S.
Kaviua for Trans-Namibian Mining and Minerals (Pty) Ltd and dated
31 October 2013.
Katoro has not independently verified the Historical Estimate
and no Competent Person (as defined in the SAMREC Code, 2016
Edition) has done sufficient work to classify this as a 'current
Mineral Resource' and therefore Katoro is not treating the
Historical Estimate as a current Mineral Resource Estimate.
Further, the Historical Estimate was classified according to the
SAMREC Code in place at the time it was produced, being the 2007
Edition as amended in 2009. This code has been superseded by the
SAMREC Code, 2016 Edition, and the reader should note that the most
recently published SAMREC Code is more rigorous in its estimation
and classification protocols than the previous codes, and the
Historical Estimate should be re-evaluated in terms of these later
codes.
Consequently, no reliance can be placed on the Historical
Estimate as no assurance can be given that any particular grade,
stripping ratio or grade of minerals will in fact be realised or
that any current Mineral Resource Estimate or Ore Reserve will ever
be delineated or that planned future exploration and study programs
will result in profitable commercial mining operations.
The Historical Estimate was calculated based on the technical
programme and analysis summarised below.
High resolution airborne magnetic data was purchased from the
Ministry of Mine and Energy to identify magnetic iron formations
and were utilised to identify target areas, especially where
mapping has confirmed outcropping iron formations. Additionally,
ground magnetic surveys were carried out and all survey lines
together with anomalous readings, were plotted on topographical
maps and used for selecting sites for Reverse Circulation ('RC')
drilling.
A total of 25 RC boreholes were drilled on two separate drilling
campaigns in 2013 by hard rock drilling on farm Naruchas. The
boreholes were drilled on an irregular grid, with the drills pacing
ranging from 20m in the north-east to 500m in the southeastern part
of Naruchas. A total of 1,307m was drilled at an average depth of
52.2m. The aim of the drilling was to test the continuity of the
iron ore formations down depth for estimation purposes and to
understand their occurrence. At the drill site, 1m sample intervals
were collected from the cyclone and then riffle split to obtain two
samples A and B, each weighing 250g. Drill chips were also
collected and placed into chip trays for geological logging.
All samples taken during RC drilling campaigns were assayed
using NITON handheld XRF spectrometer for screening only. Samples
exceeding 25% Fe (32% Fe(2) O(3) equivalent) were selected and sent
for analysis at Acts laboratories. A total of 50 drill chip samples
were selected and submitted as well. The samples were checked,
verified, then crushed using a jaw crusher before splitting to
obtain representative samples. The representative samples were then
mill pulverised prior to analysis via wavelength dispersive X-Ray
Fluorescence Spectroscopy. Certified reference materials,
duplicates and blanks were incorporated in the testing procedure to
ensure the integrity of results.
No samples were analysed for specific gravity ('sg;) from farm
Naruchas, with an assumed sg of 4.5t/m(3) used for the mineralised
iron formation and 3.0t/m(3) for unmineralised lithologies.
Resource estimation was completed using MineSight software and
followed a relatively typical process. Lithological models were
developed for carbonates, quartzites, diamictites, alluvial sands
and the mineralised iron formation. These were based on surface
mapping, grab sampling and drilling data, with structural planes
also modelled. Iron grades were observed to drop sharply at
lithological boundaries, and the cut-off could be described as
geological; in practice, a 15% Fe cut-off was applied in
combination with minimum widths for the iron formation of 2m. Any
iron formation not meeting these criteria was reclassified as
diamictite.
The block models were built using a 100m x 100m x 25m blocks (L
x W x H), a tighter spacing in general than the drilling, which was
on average at 250m spacings. The block model was subsequently coded
using the iron formation lithological model and IDW2 interpolation,
with a primary search ellipse of 2,000 x 2,000 x 100m for the x, y
and z search directions respectively.
The classifications of the Historical Estimate were done on the
following basis:
-- Inferred: mapped, sampled and drilled on a drill spacing of
500m - 1,000m and a depth of -75 to -100 levels
-- Indicated: mapped, sampled and drilled on a drill spacing of
250m - 500m and a depth of -50 to -75 levels
-- Measured: mapped, sampled and drilled on a drill spacing of
50m - 250m and a depth of 0 to -50 levels
There are no more recent estimates or data available to the
Company's knowledge.
In addition to the Naruchas iron ore, the Kanubeb Wes, Kanubeb
Oos and Kanubeb farms are in early phases of exploration for copper
deposits.
Work Programme and Budget
The JV Partners will, in accordance with the provisions of the
JV agreement, assess all work done to date and agree on an
appropriate development budget and work programme to:
-- advance the Project to a level where it will qualify as a bankable project, and
-- procure appropriate debt, project and equity funding from
prospective investors for the purposes of developing, constructing
and commissioning a producing mine capable of producing a targeted
c. 3 million tonnes of ore per annum, should further development
and exploration work return positive results.
Katoro does not have any funding obligation to the JV other than
it shall be obliged to procure the funding required in respect of
all expenditure of the JV. For the avoidance of doubt, this does
not commit Katoro to directly provide the funding; the obligation
is limited to procurement only. In the event that Katoro does not
or cannot procure such funding, the JV will unwind and Katoro will
have no further interest in the Project.
Executive Chairman of Katoro, Louis Coetzee, says: "This JV
represents an exciting investment opportunity for the Company with
the possibility of near-term value uplift.
" Our initial objective is to rapidly determine the work
programme and budget that will be required to advance the project
to bankability status. Based on the preliminary evaluation and
review of the substantial amount of historic work done to date on
the Project, we believe that this can be achieved within a
relatively short timeframe and with minimal rework and/or
additional work on the Project. A significant number of the
required licenses and/or permits are also already in place, which
will make the process towards achieving industry standard
bankability significantly easier and quicker.
"The JV also includes exploration rights that cover a number of
very exciting copper anomalies, and we will be looking at getting
an extensive copper exploration programme going in parallel to the
work on the iron Project. Previous work undertaken by, amongst
others, Mesars Universal Ores (Pty) Ltd, Kaniganas Mining Company
(Carbonado Investments (Pty) Ltd), Newmont South Africa Limited and
Falconbridge of South West Africa (F.S.W.A), and ActLabs, will
assist the company in focusing its near term development
programme.
"We look forward to working with TNMM to bring this Project to
fruition and will provide further market updates shortly to keep
shareholders reasonably informed of our progress."
FURTHER INFORMATION
The JV Agreement ('Agreement')
Under the terms of the Agreement, Katoro is required to procure
financing for the full funding requirements of the Project and JV,
including the construction and commissioning of a beneficiation
plant and auxiliary operations should the continued development and
exploration work provide positive results. The Agreement has a
stated objectives for the JV to target production capacity of 3Mtpa
once all development work is completed.
Pursuant to the Agreement, once the only remaining conditions
have been met, being the approval of a work programme and
associated budget to advance the Project to bankability status, the
JV Partners will form the JV, which is intended to be an
unincorporated JV to be held 50% by the Company and 50% by
TNMM.
Under the Agreement, TNMM shall make available to the JV, all
technical data relating to the TNMM Properties and TNMM Rights,
including but not limited to, all geological data, feasibility
studies, geophysical and geochemical data in its possession. TNMM
will furthermore provide the JV with customary warranties and
undertakings in respect of ownership of the TNMM Properties and
TNMM Rights.
It is proposed that the JV will continue for an indefinite
period for as long as Katoro is in compliance with its obligations
in accordance with the Agreement, including sourcing funding for
the development of the Project, which, if positive, leading to the
mining, processing, beneficiating and selling of concentrates of
iron ore and any other minerals that may be processable in
economically viable quantities.
The JV Partners will establish a Management Committee to oversee
the objectives of the JV, including the consideration and approval
of the work programme and budget, the determination of the
admissibility of expenditure and the appointment of auditors to the
JV. The Management Committee will furthermore establish Technical
Subcommittees to advise and review the technical aspects of the JV.
Katoro and TNMM shall appoint two representatives to the Management
Committee, respectively, with Katoro appointing the chairman of the
Management Committee who must be a member of same. Subject to
Katoro having procured the full funding requirements for the JV,
the Company will be entitled to appoint three members to the
Management Committee.
The right to net revenue earned from all concentrates of iron
ore and any other mineral mined or acquired by the JV is to vest in
accordance with each party's interest in the JV.
Under the Agreement, Katoro has a pre-emptive right to acquire
up to 60% of the total issued share capital of TNMM and the same
percentage of all claims on the shareholder loan account against
TNMM should the TNMM shareholders decide to sell its interest in
TNMM. If the right is exercised, the purchase price may be elected
to be payable by cash or new Katoro shares.
The Agreement contains assignment rights of the whole or any
part of a party's rights and obligations to an affiliate, subject
to such affiliate covenanting to be bound by the terms and
conditions of the Agreement. The Agreement also contains
termination rights including: (i) if the consequences of
expropriation materially affect the economic feasibility of the JV;
(ii) in the event that the mining or processing activities
conducted by the JV should prove, to the satisfaction of both
parties, that further exploration or mining would not be
commercially viable; or (iii) at any time by mutual agreement. In
addition, the JV shall terminate 90 days after the manager of the
JV delivers to each party a written notice stating that all viable
deposits of iron ore and/or any other minerals to which the TNMM
Properties relate have been exhausted.
IMPORTANT INFORMATION FOR SHAREHOLDERS
Katoro shareholders should note that there is no certainty that
the Project funding, which includes all funding that is required to
advance the project to industry bankability standards, and to
construct and commission the Project, will be secured for the
continued development of the Project, and if the Project
progresses, the construction and commissioning of a plant to
produce a marketable iron ore product or any other minerals or
derivatives thereof. If the Project funding is not secured, the
conditions of the Agreement will not have been satisfied and the
Project will not commence, meaning that the Company will have no
further interest in the JV or the Project.
Review by Qualified Persons
Information in this announcement that relates to the Naruchas
Mineral Resource is taken from the report titled 'Mineral Resource
and Ore Reserve Statement' compiled by Miss Sheron Kaviua for
Trans-Namibian Mining and Minerals (Pty) Ltd and dated 31 October
2013 (the ' Report '). The Report contains a SAMREC-compliant
Mineral Resource estimate, based on the SAMREC CODE, 2007 Edition.
The Competent Person responsible for the submission of this
document, Miss Sheron Kaviua, was registered with the Geological
Society of South Africa and was a Competent Person in resource
evaluation of base metals based on the criteria set out in the
SAMREC CODE at the date of the report at which point she had seven
years' experience in resource estimation and three years'
experience in resource statement compilation. Specifically, she had
four years' experience relevant to the style of mineralisation and
type of deposit at Naruchas, where she was involved in exploration
in the period 2010 to 2013 and conducted several sampling and
mapping programmes on the property as an independent
consultant.
Information contained in this announcement has also been
reviewed by Mr. Noel O'Keeffe, geologist, BSC. P.Geo, who is a
Member of the Institute of Geologists of Ireland. Mr. O'Keeffe has
several years' experience in the management and evaluation of
mineral exploration projects.
Further announcements in respect of the JV will be made as
appropriate.
Glossary of Technical Terms
BCM(S) Bench CubicMetre (s) means a measure of volume of one
cubic meter for excavation and payment purposes and
is intended to be the volume of the original rock in
situ prior to blasting and excavation, as determined
by using generally accepted survey methods.
Cut-off grade The cut-off grade is the level below which material
within an ore body does not contain sufficient value
to economically justify processing into a final saleable
form.
-------------------------------------------------------------------
Diamictite A poorly sorted or non-sorted terrigenous non-calcareous
sedimentary rock that contains variously sized clasts
from clay to boulders in a muddy matrix.
-------------------------------------------------------------------
Density Measure of the relative "heaviness" of objects in terms
of constant volume. Density = -mass/volume.
-------------------------------------------------------------------
Fe The percentage of the chemical element 'Iron'.
-------------------------------------------------------------------
Fe(2) O(3) The percentage of the mineral 'Haematite', which is
% often the principal ore mineral of economic interest
containing iron in Iron ore deposits.
-------------------------------------------------------------------
grade The concentration of the desired/target metal or other
mineral material.
-------------------------------------------------------------------
IDW2 Inverse distance weighting squared. An interpolation
technique where the influence of a data point is reduced
in proportion to the square of the distance between
it and the unknown point being estimated.
-------------------------------------------------------------------
Indicated That part of a mineral resource for which tonnage, densities,
Mineral Resource shape, physical characteristics, grade and quality can
be estimated with a moderate level of confidence. Based
on exploration, sampling and testing information gathered
through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill-holes.
The data-point locations are appropriate to confirm
physical continuity, while they are too widely or inappropriately
spaced to confirm quality continuity. However, such
locations are spaced closely enough for quality continuity
to be assumed.
-------------------------------------------------------------------
Inferred That part of a mineral resource for which tonnage, grade
Mineral Resource and quality can be estimated with a low level of confidence.
It is inferred from geological evidence and assumed
but not verified physical continuity with or without
iron quality continuity. Based on exploration, sampling
and testing information gathered through appropriate
techniques from locations such as outcrops, trenches,
pits, workings and drill-holes which is limited or of
uncertain quality or reliability.
-------------------------------------------------------------------
In Situ Ore Ore (a naturally occurring mineral containing a valuable
constituent (such as metal) for which it is mined and
worked) that is in its raw state in the ground.
-------------------------------------------------------------------
m A metre - a measure of length or thickness.
-------------------------------------------------------------------
Measured A Measured Mineral Resource is that part of a Mineral
Mineral Resource Resource for which quantity, grade or quality, densities,
shape and physical characteristics are estimated with
confidence sufficient to allow the application of Modifying
Factors to support detailed mine planning and final
evaluation of the economic viability of the deposit.
-------------------------------------------------------------------
Mineral Resource A 'Mineral Resource' is a concentration or occurrence
of diamonds, natural solid inorganic material or natural
solid fossilised organic material, including base and
precious metals, coal and industrial minerals, in or
on the Earth's crust in such form and quantity and of
such a grade or quality that it has reasonable prospects
for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a Mineral
Resource are known, estimated or interpreted from specific
geological evidence and knowledge.
-------------------------------------------------------------------
Mt Abbreviation for megaton (a measure of weight). Equals
1 million tonnes.
-------------------------------------------------------------------
Probable A 'Probable Mineral Reserve' is the economically mineable
Mineral Reserve material derived from a Measured or Indicated Mineral
Resource or both. It is estimated with a lower level
of confidence than a Proved Mineral Reserve. It includes
diluting and contaminating materials and allows for
losses that are expected to occur when the material
is mined. Appropriate assessments to a minimum of a
Pre-Feasibility Study for a project or a Life of Mine
Plan for an operation must have been carried out, including
consideration of, and modification by, realistically
assumed mining, metallurgical, economic, marketing,
legal, environmental, social and governmental factors.
Such modifying factors must be disclosed (SAMREC definition).
-------------------------------------------------------------------
Proved Mineral A 'Proved Mineral Reserve' is the economically mineable
Reserve material derived from a Measured Mineral Resource. It
is estimated with a high level of confidence. It includes
diluting and contaminating materials and allows for
losses that are expected to occur when the material
is mined. Appropriate assessments to a minimum of a
Pre-Feasibility Study for a project or a Life of Mine
Plan for an operation must have been carried out, including
consideration of, and modification by, realistically
assumed mining, metallurgical, economic, marketing,
legal, environmental, social and governmental factors.
Such modifying factors must be disclosed (SAMREC definition).
-------------------------------------------------------------------
Reverse Circulation A method of drilling using inner and outer drill tubes
Drilling where a pulverised sample of rock is returned to the
surface by pneumatic pressure.
-------------------------------------------------------------------
Run of Mine The raw unprocessed or uncrushed Ore in its natural
state obtained after blasting or digging from the mineralised
zone.
-------------------------------------------------------------------
SAMREC South African Code for Reporting Exploration Results,
Mineral Resources and Ore Reserves
-------------------------------------------------------------------
Stripping The amount of waste (or overburden) that must be removed
Ratio to release a given Ore quantity.
-------------------------------------------------------------------
Historical Under the SAMREC Code, an estimate of the quantity,
Estimate grade, or metal or mineral content of a deposit that
an issuer has not verified as a current Mineral Resource
or Mineral Reserve. The estimate predates the issuing
of the Code and/or was prepared before the issuer acquired,
or entered into an agreement to acquire, an interest
in the property that contains the deposit.
-------------------------------------------------------------------
This announcement contains inside information as stipulated
under the Market Abuse Regulations (EU) no. 596/2014.
**ENDS**
For further information please visit www.katorogold.com or
contact:
Louis Coetzee louisc@katorogold.com Katoro Gold Executive Chairman
plc
Bhavesh Patel +44 20 3440 6800 RFC Ambrian Nominated Advisor
/ Stephen Ltd
Allen
------------------------------ -------------------- ----------------------
Nick Emmerson +44 (0) 1483 413 500 SI Capital Broker
Sam Lomanto Ltd
------------------------------ -------------------- ----------------------
Zainab Slemang zainab@lifacommunications.com Lifa Communications Investor and Media
van Rijmenant Relations Consultant
------------------------------ -------------------- ----------------------
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