RNS Number:2078W
Scarborough Minerals PLC
08 May 2007
RNS / ASX ANNOUNCEMENT
CVRD TO PARTNER SCARBOROUGH ON VOSTOK COPPER PROJECT
The Directors of Scarborough Minerals plc ("Scarborough") are pleased to
announce that Scarborough has obtained all of the necessary approvals from the
Government of Kazakhstan to permit the completion of an agreement with Companhia
Vale do Rio Doce ("CVRD"), one of the world's major mining companies, to advance
the Vostok copper project ("Vostok"). This project is currently 100% owned by a
wholly-owned subsidiary of Scarborough, under a contract with the Kazakh
Government.
Once final conditions precedent have been satisfied, expected to be later this
month, CVRD will acquire an 85% interest in Vostok. CVRD will then spend an
initial US$4 million over two years to progress Vostok to the stage of a
pre-feasibility study. As part of this initial US$4 million expenditure,
Scarborough will be reimbursed all expenditures on Vostok from 1 January 2005 to
the date on which CVRD acquires its interest in Vostok.
At completion of the initial US$4 million spending commitment, CVRD will have
the option to retain its 85% interest in Vostok through the payment of US$1
million to Scarborough and funding 100% of a bankable feasibility study ("BFS"),
targeting the development of Vostok as a major copper project.
CVRD has committed to a minimum expenditure of US$1.6 million before it can
withdraw, and if it withdraws prior to the completion of the BFS, then its 85%
of Vostok reverts to Scarborough.
At completion of a successful BFS, Scarborough can elect to contribute to the
funding of its remaining share of the project (15%), or convert its share into a
1.5% net smelter return royalty position in exchange for CVRD funding 100% of
the implementation costs.
Scarborough Chairman, Robert Champion de Crespigny commenting on the agreement,
noted that Scarborough was "very pleased to have secured next stage funding and
an experienced operator for the Vostok project in CVRD. This venture between
Scarborough and CVRD will bring forward the timetable to test the project's
potential and thereby unlock significant value, particularly in this time of
record copper prices."
The agreement is consistent with Scarborough's strategy of working with
experienced partners to add value to resources rather than being a sole owner
and operator of resource projects. It also further demonstrates Scarborough's
ability to secure agreements with and work with the world's major mining
companies.
About Vostok
The Vostok copper project is located in southern Kazakhstan, covering an area of
111 square kilometres, which contain the Vostok 1, 2, 3, 4 and 5 prospects,
located within an area of 6 kilometres by 2 kilometres. Previous estimates,
based on Soviet-era data (not JORC-compliant), suggest that these deposits may
contain 2 million tonnes of copper to 500 metres depth.
Work conducted by Scarborough and its predecessor companies since its
acquisition in 2004 has focused on drilling at the Vostok 1 and Vostok 3
prospects and the initiation of metallurgical testwork to determine acid soluble
copper levels. The 2007 exploration programme is aimed at:
* completing an additional 10 diamond drill holes at Vostok 1 in order to permit
the calculation of an inferred resource estimate for the upper 300 metres of
the Vostok 1 prospect; and at
* commencement of grass roots exploration of the areas outside of Vostok 1 and 3
for additional copper and copper-gold resources, including conducting a ground
magnetics and IP survey.
About Scarborough
Scarborough is a resource investment and finance company, listed on the main
market of the London Stock Exchange (LSE:SCRB) and on the Australian Stock
Exchange (ASX: SRB). It holds direct interests in mining projects, including the
Sappes gold project in Greece, the Lady Loretta zinc project in Queensland,
Australia and Vostok and indirect interests in resource companies including
Mineral Securities Limited, Iluka Resources Limited, Chaarat Gold Limited and
Buka Gold Limited. Scarborough had cash reserves at 31 March 2007 of
approximately US$29.8 million, excluding cash held in listed subsidiaries.
About CVRD
Companhia Vale do Rio Doce (CVRD) is the second largest diversified metals and
mining company in the world, with a market capitalization of approximately US$
90 billion. CVRD is the world's largest global producer and exporter of iron ore
and pellets and one of the world's largest producers of nickel, manganese and
ferro alloys. CVRD also produces copper, aluminium products, precious metals,
cobalt, kaolin, potash and coal. CVRD is the largest logistics player in Brazil,
owning and operating three railroads and eight ports. CVRD has offices and
operations in all five continents.
For further information contact:
Robert J. Champion de Crespigny AC U.K.: +44 20 7152 6230
Chairman Aust: +61 2 9264 5515
Email: ld@scrbmin.com
Finsbury
Robin Walker / Clare Strange U.K.: +44 20 7251 3801
This information is provided by RNS
The company news service from the London Stock Exchange
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