4th Jul 2014 12:32
LONDON (Alliance News) - North River Resources PLC Friday said it has signed a USD12 million project equity agreement with Greenstone Resources, providing it with the equity capital to re-open the Namib mine in Namibia, and bring the site back into production.
North River shares jumped 20% on Friday and is trading at 0.600 pence, putting it amongst the top five AIM All-Share risers.
The mineral exploration and development company said the funding packaging will allow it to restart the company's Namib lead and zinc project, with site preparation and advanced construction planning to begin immediately, it said.
"We're hoping to get back into production at Namib in twelve months," Managing Director Martin French told Alliance News. "The major infrastructure at the previously producing mine is in good condition and development towards production should be a relatively quick process."
In June, the company announced a mine development plan for the site which set out an estimated payback on the project for a 250 kilo tonnes per year plant of just 1.4 years, based on mineral inventory of 425 kilo tonnes of indicated resource and 234 kilo tonnes of inferred resource, at an estimated pre-production capital expenditure of USD25.2 million.
"We've started an accelerated resource expansion programme with new drills on site, started site preparation, began ramping up the mining aspects of the project and there is new infrastructure being developed," French added.
Under the investment agreement with Greenstone Resources, Greenstone has subscribed for an initial tranche of UUSD2.8 million worth of North River shares at 0.6 pence, and has agreed to provide up to USD8.9 million of equity in three further tranches at increasing prices to underpin growth in shareholder value.
Greenstone, which is now the biggest shareholder in North River, having increased its shareholding from 2.41% to 18.36%, also has the right to nominate one director to board of North River.
"The chemistry is good between North River and Greenstone," French said. "We both really want to make this work and it seems like we are totally on the same page when it comes to our development plans."
Each tranche of the deal is dependant on certain conditions linked to the development of Namib being met, including the company needing to achieve approval for its Environmental Impact Assessment at the site in order to achieve its next tranche of USD2.9 million.
The company applied for Namib's environmental assessment at the beginning of this year and made its application for a mining licence at the site in April.
In the future, North River plans to use the Namib site to acquire and develop further assets in order to grow and the company is already contemplating its options.
"Namib is a platform to grow the company and its a good time to be out looking for acquisitions," French said. "We're looking at options in Namibia, near Namibia or lead-zinc assets, preferably near to our site. But for now we're just looking."
By Tom McIvor; [email protected]; @TomMcIvor1
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