19th Jan 2015 08:48
LONDON (Alliance News) - Kibo Mining PLC and Metal Tiger PLC both saw their shares rise on Monday after announcing they have entered into a 50:50 joint venture for the Morogoro South gold-prospective exploration portfolio in Tanzania, building on another joint venture for uranium exploration signed last week.
Kibo shares jumped 11% to 8.45 pence per share on Monday morning, whilst Metal Tiger shares rose 5.9% to 0.900 pence per share.
The exploration portfolio, owned by Kibo, covers 18 licenses covering a surface area of 1,400 square kilometres. Both companies have signed a memorandum of understanding concerning the joint venture.
"We are delighted to announce this memorandum of understanding that builds upon our existing working relationship with Metal Tiger. When established, this joint venture will mean that all five of the company's projects will be active and operational," said Louis Coetzee, chief executive of Kibo.
"The 50:50 joint venture in relation to Kibo's Morogoro project is also in line with Metal Tiger's primary interest in gold opportunities," added Cameron Parry, chief executive of Metal Tiger.
Under the memorandum, Metal Tiger must complete its due diligence process by February 20 and will be responsible for ongoing license renewal fees and other maintenance costs of the portfolio for a minimum of 12 months and a maximum of three years, at an estimated cost of around USD100,000 per year.
Metal Tiger will spend around USD800,000 on project costs, including license fees over the course of the joint venture to retain a 50% interest. If Metal Tiger spends less than USD800,000 in total, the company's interest will drop to a 10% free carry interest in the project.
If Metal Tiger invests less than USD300,000 in the project, it will lose all interest in the project, said Kibo.
Kibo will also issue 10 million warrants for new shares to Metal Tiger, exercisable over a three year term at an exercise price of 9.0 pence per share. The exercise price will increase to 14.50 pence per share if Kibo's share price moves above 18.0 pence per share for at least a 15 day period, and up to 19.0 pence per share if the miner's share price tops 27.0 pence per share.
Last Wednesday, the pair entered into a separate agreement to explore Kibo's uranium-prospective Pinewood portfolio in Tanzania. Metal Tiger is to be issued with an additional 10 million warrants for 10 million new shares in Kibo under the agreement, with an exercise price of 3.0 pence each and a term of three years from the date of issue.
By Joshua Warner; [email protected]; @JoshAlliance
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