TIDMBMR
RNS Number : 2351H
BMR Group PLC
16 August 2016
BMR Group PLC ("BMR" or the "Company")
Exclusive Option Agreement
Introduction
The Board is pleased to announce that, on 15 August 2016, the
Company entered into a 60 day exclusive option agreement
("Exclusivity Agreement"), with Bushbuck Resources Limited of
Zambia ("Bushbuck"), to acquire its Large Scale Prospecting Licence
19653-HQ-LPL ("Star Zinc") in an area to the immediate north of
Lusaka, Zambia, for a total cash consideration of US$1 million plus
taxes, conditional upon, inter alia, satisfactory completion of due
diligence and the granting of Ministerial approval to the transfer
of the licence.
Agreement with Bushbuck
Under the terms of the Exclusivity Agreement, the Company has
paid Bushbuck a non-refundable deposit of US$30,000 ("Deposit")
plus 16% VAT to undertake and complete the requisite due diligence
over the title to Star Zinc, which can be extended from 60 days to
120 days at Bushbuck's discretion, in order for the Ministerial
approval for the transfer of the Licence to be formalised. BMR is
required, within seven days of such approval, to make payment of
US$1 million, less the Deposit, plus 16% VAT and property transfer
tax of 10%. The consideration is expected to be satisfied from the
cash resources shortly to be made available under the terms of the
anticipated loan facility of US$3.5 million in connection with the
off-take agreement announced on 8 August 2016.
Strategy
The Board believes that the acquisition of Star Zinc would
represent an important strategic step for BMR as the in situ ore
contains high grade zinc ("Zn") which is planned to be either
blended with the tailings from the Leach Plant Residues, to improve
metal recoveries, or used to raise the plant head grade to increase
Zn production at the Company's proposed processing plant at Kabwe.
This is expected to enhance the quality of the product, subject to
test work to confirm its compatibility. This, in turn, the Company
expects, will underpin the long-term future of the Kabwe
operation.
The Company's first priority will be to undertake a drilling
programme on the karst fill/saprolitic material in the area of the
present open pit to determine the extent of the, as yet, untested
surface mineralisation and to establish a mineable resource. BMR
plans initially to spend up to US$200,000 over the next 18
months.
Wardell Armstrong International Report
Wardell Armstrong International was instructed by the Company
earlier this year to prepare a technical report for the Company
into the geological potential of Star Zinc and review the historic
and in-house metallurgical test work results. The Star Zinc Large
Scale Prospecting Licence comprises 83 kms(2) and is situated
approximately 15km NNW of Lusaka on the Great North Road and 90kms
from Kabwe. The deposit was mined briefly in the 1950s by open pit
mine with the ore treated at the Kabwe mine. The deposit was
drilled by Chartered Exploration (the geological exploration arm of
Anglo American) in the 1960s. Later, AVMIN Development (Zambia) Ltd
("AVMIN") acquired the licence and undertook a limited amount of
exploration.
The Star Zinc Large Scale Exploration Licence has a current and
valid Environmental Project Brief (EPB) for exploration work and is
valid through to July 2018 with the right to apply for renewal at
least six months before the expiry date of the current permit.
Geological Setting and Mineral Resource
The primary Star Zinc ores have been categorised as hypogene
(hydrothermal) in nature and described as "A high grade
structurally controlled willemite deposit". Based on Chartered
Exploration's 1960s drilling programme, in January 2015 CSA Global
reinterpreted the results and declared a non-JORC hard rock
resource of 275,166 tonnes @ 20.2% Zn with a cut-off grade of 14%
Zn.
The hard rock deposit comprises a sub horizontal east and west
limb at a depth of approximately 40 metres. Both limbs remain open
on strike. Silver and Germanium are associated with the zinc
mineralisation with historically reported grades of up to 150g/t of
Silver and 110g/t Germanium.
Later, AVMIN identified three additional targets within the
Permit area known as Star East, Star West and Star South. Selected
'float' samples taken from the target areas assayed at over 30% Zn.
Soil geochemistry results over all three targets have consistently
returned Ag (silver) assays of 8 to 22 ppm. Rock chip samples of
>30% Zn and 57g/t Ag have been taken. Further geological
exploration work is planned to be undertaken on these three targets
in due course.
Recent investigation work by GeoQuest (Zambia) has identified
considerable potential tonnages of karst fill/saprolitic material
in the vicinity of the open pit, reporting grades up to 20% Zn, the
extent of which has never been fully explored and which remain
undrilled and untested. Grab samples of this hard rock and karst
fill analysed by Petrolab (Cornwall) established that the Zn
comprised 95% and 72% willemite, respectively.
Metallurgy
Bushbuck engaged Skorpion Mineral Processing to undertake a
metallurgical programme of test work on grab samples from trenches
and stockpiled ore of the Star Zinc hard rock ore and karst fill
material. This included gravity and magnetic separation, froth
flotation and acid/alkaline leaching. The acid leach Zn recoveries
were reported to be in excess of 90%.
BMR has also carried out preliminary scoping metallurgical tests
using the services of Alfred H Knight and ZCCM, Kitwe, Zambia on a
30 kg grab sample of the karst fill material and achieved a similar
Zn recovery. Both the Skorpion and BMR tests required approximately
400kg acid per tonne of ore treated to achieve these recoveries.
Future test work will focus on optimising these results using
larger representative samples.
This release has been reviewed by Geoff Casson, B.Sc. (Hons),
PhD, R Eng (Zambia), Member Engineering Institute of Zambia
(Metallurgy), General Manager of the Company's Zambian subsidiary,
Enviro Processing Ltd, who is a Qualified Person in accordance with
the guidance note for Mining, Oil & Gas Companies issued by the
London Stock Exchange in respect of AIM Companies.
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
Alex Borrelli, Chairman of BMR, commented: "We are delighted to
have secured an option over Star Zinc which has the potential for
BMR to enhance the grade of the zinc products from the processing
plant we are establishing at Kabwe.
"We expect to secure the necessary funds for the Star Zinc
acquisition through the proposed US$3.5 million loan facility and
we have support for the acquisition from our off-take partner,
African Compass International.
"In addition, Star Zinc will enable BMR to extend the operating
life of the plant as further ore resource can be processed at Kabwe
combined with the leach plant residues."
Ends
For further information:
BMR Group PLC 020 7734 7282
Alex Borrelli, CEO and Chairman
WH Ireland Limited 020 7220 1666
NOMAD and Joint Broker
Chris Fielding, Head of Corporate Finance
Peterhouse Corporate Finance 020 7469 0930
Joint Broker
Lucy Williams/ Duncan Vasey/ Heena Karani
This information is provided by RNS
The company news service from the London Stock Exchange
END
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