22nd Jul 2015 09:06
LONDON (Alliance News) - North River Resources PLC shares dropped on Wednesday after it said it is behind schedule on developing the Namib project in Namibia and laid out a revised schedule and funding plan for the project after incurring problems with its existing plan.
North River shares were down 15% to 0.268 pence per share on Wednesday morning.
The miner said it has reached a "critical milestone" as it moves toward the construction phase of the project, which will ultimately lead to a 250,000 tonne per annum operation.
North River submitted its mining licence application for the project in April whilst working on completing the definitive feasibility study, but then identified a series of further studies that needed to be completed for the mine development plan before it could make an investment decision.
The company progressed those studies in the first half of 2015, and it is now in a position to begin front end engineering and design work on an optimised processing plant at the project which will allow it to conduct early mine development work.
The company conceded that the timeline has been changed, but said this was also caused by delayed discussions with local authorities.
"Subject to funding, the company expects to be in a position to complete these phases of work during the fourth quarter of 2015, which will be sufficient to support an investment decision on the project," said the company.
North River is also still waiting for the mining licence to be awarded at the project and has released a revised funding plan due to the delays resulting in the company having to cancel its existing arrnagement with Greenstone Resources LP.
It was originally anticipated that North River's further equity requirements for the project would be met from the remainder of its conditional commitments from Greenstone. North River signed a USD12 million investment agreement with Greenstone in July.
North River has already drawn down two tranches to date from Greenstone, totalling USD6.0 million, and the remaining USD6.0 million can not be released until certain milestones at Namib have been met.
North River has therefore conducted a review of the agreement, and decided it cannot achieve the goals neccessary to gain access to the remaining funds.
"The board has therefore notified Greenstone to this effect, and as a result the company and Greenstone have agreed to terminate the current investment agreement," said North River.
"However, Greenstone has indicated that it remains a committed shareholder and is supportive of the company's development plans for the Project and the next phase of work," it added.
That leaves the company with a low cash balance of USD500,000 and no short term financing plan in place. The revised financing plan for the project will be released shortly, but will also need shareholder approval.
Although the definitive terms have not been laid out, North River said it will generate short term funding by conducting an equity fundraising which will fund the company and project through to construction.
It will then conduct a second fundraising once it has secured the mining license from local authorities comprising of both debt and equity which will cover the cost of construction and an ongoing resource expansion drilling programme.
In a separate statement on Wednesday and in spite of the delayed schedule and loss of funding, North River said its confidence in the Namib lead and zinc project in Namibia has "improved significantly" after it completed additional metallurgical testwork to optimise the project.
Lead concentrate grades are expected to be around 62.2% lead at 91.1% lead recovery, and zinc concentrate grades will be around 52.4% zinc at 89.2% zinc recovery.
North River said it has defined the ore-processing flow sheet for the project which "eliminates variability associated with the previously proposed process and ensures a robust operating environment for future planned production," it said.
"The improvement in operational control, that this process flow sheet provides, will add significant value to our preparations for Front End Engineering and Design ahead of a construction decision," said Chief Executive James Beams.
"The optimisation work carried out by independent experts provides the company with a definitive and robust processing solution for our stand-out Namib Lead Zinc Mine in Namibia," said Beams.
By Joshua Warner; [email protected]; @JoshAlliance
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