TIDMGLR

RNS Number : 9851W

Galileo Resources PLC

30 December 2021

For immediate release

30 December 2021

Galileo Resources Plc

("Galileo" or "the Company")

Joint Venture Agreement over

Luansobe Copper Project, Zambia

Galileo Resources plc ("Galileo "or the "Company") is pleased to provide details regarding a Joint Venture Agreement (the "JV Agreement") entered into on 29 December 2021 with Statunga Investments Limited (the "Vendor") covering the Luansobe Copper Project, Zambia comprising Small Scale Exploration Licence No. 28340-HQ-SEL (the "Licence") (the "Project" )

Highlights

 
 US$400K in                   The JV Agreement provides Galileo the right to 
  Initial JV                   earn an initial 75% interest in a special purpose 
  Period and                   joint venture company (the "JV Company") to be 
  5M Galileo                   established under Zambia law to, with Ministerial 
  shares to                    Consent, acquire the Licence, and the technical 
  earn 75% JV                  information and other information and assets related 
  Interest                     to the Luansobe Project by making an initial payment 
                               of US$200,000 and a second payment of US$200,000 
                               in the initial period from the date of the JV 
                               Agreement by 20 February 2022 (the "Initial JV 
                               Period") and issuing 5,000,000 Galileo shares 
                               to the Vendor. Based on the closing price share 
                               price of 0.98 pence on 29 December 2021 the last 
                               practicable date prior to this issue of this announcement, 
                               the aggregate consideration will be approximately 
                               GBP350,000. 
---------------------------  -------------------------------------------------------------- 
            Further project              During the Initial JV Period Galileo will conduct 
             assessment                   further due diligence in relation to the Luansobe 
             during Initial               Project and may at its sole discretion at any 
             JV Period                    time prior to the end of the Initial JV Period 
                                          give notice to the Vendor that it has decided 
                                          not to proceed with the Joint Venture. 
---------------------------  -------------------------------------------------------------- 
            Technical         Galileo has undertaken to commence raw data investigation 
             management        of the technical information available in relation 
             of JV             to the Project and devise an exploration programme 
                               for the Luansobe Project, which in their opinion 
                               maximise the value of the Luansobe Project with 
                               a view to completing a Project Feasibility Study 
                               within 18 months of 20 February 2022. 
---------------------------  -------------------------------------------------------------- 
            Project near                 T he Luansobe prospect is situated some 15km to 
             giant Mufulira               the northwest of the Mufulira Mine site, with 
             copper mine                  mineralisation occurring as stratabound layers 
                                          and lenses dipping at 30 degrees to the northwest 
                                          along the same stratigraphic horizon as the giant 
                                          Mufulira copper mine, which produced well over 
                                          9Mt of copper metal during its operation. 
---------------------------  -------------------------------------------------------------- 
 Very prospective             The Company has access to historic non JORC compliant 
  historic studies             reports provided by the Vendor based on previous 
                               exploration on the Project. 
 
                               Copper mineralisation is reported to occur over 
                               about 3km of strike and to at least 1,250m depth. 
                               A 1974 report suggests the potential for a non-JORC 
                               compliant global resource of over 20Mt @ 2.51% 
                               Cu, with a significant proportion of oxide mineralisation 
                               occurring in the upper 70m, below the leached 
                               cap. Based on these reports the deposit appears 
                               open and relatively untested at depth 
---------------------------  -------------------------------------------------------------- 
 Project Plan                 Galileo plans to review past exploration data 
                               to develop a significant drilling programme focussed 
                               on testing the tenor and extent of the copper 
                               mineralisation indicated by previous drilling 
                               and nearby mining. The programme will incorporate 
                               twinning of selected holes from the most recent 
                               2007 drilling programme to bring the project up 
                               to JORC 2012 status, with a particular focus on 
                               the early-mining potential of the shallower oxide 
                               copper and the development of a larger-scale copper 
                               sulphide mine. 
 
                               To this end, the Company aims to undertake a Project 
                               Feasibility Study by August 2023 
---------------------------  -------------------------------------------------------------- 
 

Colin Bird Chairman & CEO said: "We are very pleased with the addition of the Luansobe brownfield Project within the Zambian Copperbelt, with the Project situated directly along strike and in close proximity to the very large Mufulira mine which has produced well over 9Mt of copper metal during its operations. The Project area has been tested by numerous drill holes in various campaigns from 1921 to 2007, with semi-continuous mineralisation reported along about 3km of strike and to at least 1,250m depth. Historical reports suggest the potential for very significant copper resources of up to 20Mt @ 2.51% Cu. Galileo proposes to undertake a substantial drilling programme to update the reported resource to JORC-compliant status with the twin objective of delineating a near-surface copper oxide deposit with early development potential and an underlying sulphide deposit for larger-scale development. "

Summary

Galileo has entered into a Joint Venture agreement with Statunga Investments Limited (the "Vendor"), a private Zambian company which holds the Luansobe Project comprising small-scale exploration licence No. 28340-HQ-SEL, covering an area of 918 Hectares granted on 16 February 2021 and with its initial 4 year term expiring on 15 February 2025. The principal shareholders of the Vendor are Zambian businessmen.

The Luansobe area is situated some 15km to the northwest of Mufulira Mine in the Zambian Copperbelt which produced well over 9Mt of copper metal during its operation. It forms part of the northwestern limb of the northwest - southeast trending Mufulira syncline and is essentially a strike continuation of Mufulira, with copper mineralisation hosted in the same stratigraphic horizons. At the Luansobe prospect mineralisation occurs over two contiguous zones, dipping at 20-30 degrees to the northeast, over a strike length of about 3km and to a vertical depth of at least 1,250m.

The top 30m from surface is reported to be leached, with oxide mineralisation occurring below this depth to about 70m below surface. Beyond this depth, copper generally occurs as sulphides. The deposit is reported to be open and relatively untested at depth. About 30% of the total contained copper occurs in acid soluble form (as copper oxide) - this is expected to be higher in the shallower parts of the deposit.

ExplorationGeology/Mineralisation

The Luansobe area is situated some 15km to the northwest of Mufulira Mine in the Zambian Copperbelt which produced well over 9Mt of copper metal during its operation. It forms part of the northwestern limb of the northwest - southeast trending Mufulira syncline and is essentially a strike continuation of Mufulira, with copper mineralisation hosted in the same stratigraphic horizons. In At the Luansobe prospect mineralisation occurs over two contiguous zones, dipping at 20-30 degrees to the northeast, over a strike length of about 3km and to a vertical depth of at least 1,250m.

The top 30m from surface is reported to be leached, with oxide mineralisation occurring below this depth to about 70m below surface. Beyond this depth, copper generally occurs as sulphides. The deposit is reported to be open and relatively untested at depth. About 30% of the total contained copper occurs in acid soluble form (as copper oxide) - this is expected to be higher in the shallower parts of the deposit.

Historic Exploration

Based on historical reports, drilling in the Luansobe prospect area first commenced in 1921 and continued intermittently to 1976. A total of 104 surface exploration boreholes were drilled on the prospect during this period. The subsequent report by V.D Fleischer in 1974 has been the main reference material. The area was estimated to contain over 20 million tonnes averaging 2.51% total copper assuming unbroken continuity between intersections and applying no rigid thickness criteria.

Later, more detailed drilling to test mineralisation to a depth of 150 metres below surface was carried out through 2006 and 2007. A total of 8,300m of diamond drilling was reported as completed in 69 drillholes. Several non-JORC compliant resource estimates were carried out at different stages up to 2008 over segments of the deposit - these will be reviewed by Galileo.

Project Potential

The Company believes that the Project has very significant potential and will be undertaking a raw data investigation of the technical information available in relation to the Project to devise an exploration programme for the Luansobe Project which will involve a significant drilling programme with the objectives of verifying previously reported drill results, in the form of hole twinning, as well as infill/extension drilling to upgrade the resource status and extend the resource. Galileo's aim would be to develop a JORC (2012) compliant resource on which to base a Project Feasibility Study. It is believed that there is considerable scope to increase the historic resource estimates - especially down-dip. The Project Feasibility Study is to be concluded within 18 months of the Initial JV Period though the study may be extended by a further 6 months if during the initial 18 months a JORC-compliant Resource is reported for the Project.

Project Licence

Statunga Investments Limited (the "Vendor"), a private Zambian company owns the Luansobe Project comprising small-scale exploration licence No. 28340-HQ-SEL, covering an area of 918 Hectares granted on 16 February 2021 and with its initial 4-year term expiring on 15 February 2025.

Summary of JV Agreement Terms

 
 1) Parties                Statunga Investments Limited (hereinafter referred 
                            to as "Vendor") and Galileo Resources Plc entered 
                            into the JV Agreement on [29] December 2021 
---------------------  -------------------------------------------------------------------- 
 2) Luansobe            The Luansobe Project's location in Zambia relative 
  Project                to the Mufulira Copper Mine in Zambia is situated 
                         approximately 15 kilometres to the North West 
                         of Mufulira Mine site as per a 27 February 2008 
                         report ( "2008 Report") provided by the Vendor 
                         . The western limit is bounded by the international 
                         border with the Democratic Republic of the Congo 
                         (DRC). The Luansobe Project forms part of the 
                         western limb of the northwest - southeast trending 
                         Mufulira syncline and has an estimated non-JORC 
                         compliant mineral resource totalling 5.5 million 
                         tonnes at 1.6%TCu, 0.5%ASCu and covers the full 
                         area of the shallow oxide zone, down-dip to 
                         include the mixed oxide-sulphide zone and the 
                         deeper sulphide zones as delineated by drilling 
                         in 2006-07 and reported in the 2008 Report. 
                         The Luansobe (Insato, Kasaria) Technical report 
                         also provided by the Vendor refers to an Indicated 
                         Mineral Resource of 14.2 million tonnes at 2% 
                         Cu and the project being 10 kilometres north-west 
                         of Mufulira in the Copperbelt Province and contained 
                         within ZCCM's Licence "Mufulira ML 15) 
 
                         (hereinafter the foregoing are collectively 
                         referred to as either the "Project" or the "Luansobe 
                         Project") 
---------------------  -------------------------------------------------------------------- 
 3) Initial JV                     (a) By entering into the JV Agreement the parties 
  period                            agreed on an exclusive basis to enter into a 
                                    joint venture in relation to the Luansobe Project. 
                                    The initial period is from the date of the JV 
                                    Agreement to 20 February 2022 (the "Initial 
                                    JV Period"). 
                                    (b) During the Initial Period Galileo will conduct 
                                    due diligence in relation to the Luansobe Project 
                                    and may at its sole discretion at any time prior 
                                    to the end of the Initial Period give notice 
                                    to the Vendor that it has decided not to proceed 
                                    with the Joint Venture ("Notice Not To Proceed"). 
                                    In the event of Galileo giving Notice Not To 
                                    Proceed (i) Galileo will not be liable to pay 
                                    the Second JV Payment (ii) Galileo will only 
                                    be entitled to a refund of the Initial JV Payment 
                                    in the event of a title defect of the Licence 
                                    or material misrepresentation under the Vendor's 
                                    warranties ("Refund Entitlement") ; and (iii) 
                                    The JV Agreement will be terminated and the 
                                    parties will have no further obligations or 
                                    liabilities under this agreement save if Galileo 
                                    is due a Refund Entitlement. 
---------------------  -------------------------------------------------------------------- 
 4) Payments                (a) Galileo has to pay the initial payment of 
  by Galileo                 US$200,000 by 31 December 2021 (the "Initial 
                             JV Payment"). 
                             (b) Galileo has to pay the second payment of 
                             US$200,000 by no later than 20 February 2022 
                             but may elect to make the payment early (the 
                             "Second JV Payment"). 
---------------------  -------------------------------------------------------------------- 
      1) Issue of       Upon payment of the Second JV Payment Galileo 
       Galileo Shares    is to issue 5,000,000 (Five Million) Galileo 
       & lock up         Resources PLC shares to the Vendor which shall 
                         be subject to a three month lock up arrangement 
                         and thereafter a further three months orderly 
                         market arrangement. Under the orderly market 
                         arrangement the shares can be sold via Galileo's 
                         broker at a price determined by the Vendor (the 
                         "Nominated Sale Price") which shall not be less 
                         than the lower of i) 10 day VWAP and ii) Galileo 
                         closing bid price on the day before the fixing 
                         of the Nominated Sale Price and Galileo's broker 
                         will have 10 business days to sell the shares 
                         at the Nominated Sale Price. 
---------------------  -------------------------------------------------------------------- 
 2) Joint Venture       The JV Agreement established a joint venture 
                         in relation to the Luansobe Project (the "Joint 
                         Venture") and once Galileo has paid the Second 
                         JV Payment (referred to above); Galileo or its 
                         nominee will be issued 75% of the shares in 
                         a to be established Zambian joint venture company 
                         (the "JV Company") to own the Licence, technical 
                         information and other information and assets 
                         related to the Luansobe Project and the Vendor 
                         will be issued 25% of the shares in the JV Company 
---------------------  -------------------------------------------------------------------- 
 3) Warranties          The Vendor has made warranties in relation to 
  by Vendor              it being the registered legal and beneficial 
                         owners of the Licence; the Licence is in good 
                         standing and covers the whole of the Luansobe 
                         Project; and other customary warranties 
---------------------  -------------------------------------------------------------------- 
 4) Technical                      (a) Galileo is to undertake to commence a raw 
  management of                     data investigation of the technical information 
  JV                                available in relation to the Project and devise 
                                    an exploration programme for the Luansobe Project, 
                                    which in Galileo's opinion will maximise the 
                                    value of the Luansobe Project and conduct a 
                                    feasibility study, which in their opinion will 
                                    identify the most economic and practical way 
                                    of advancing the project. 
                                    (b) The parties have agreed that a benchmark 
                                    expenditure for the raw data investigation and 
                                    exploration to complete a project feasibility 
                                    study (the "Project Feasibility Study Work") 
                                    is US$4,000,000 (the "Benchmark Expenditure"). 
                                    In the event that the actual expenditure incurred 
                                    on the Project Feasibility Study Work prior 
                                    to a sale is; 
                                    1. less than the Benchmark Expenditure then 
                                    the shortfall (the "Benchmark Expenditure Shortfall") 
                                    shall be added to the Vendor's share of the 
                                    gross sale proceeds as per point 8 (a) below; 
                                    and 
                                    2. more than the Benchmark Expenditure then 
                                    the excess (the "Excess Benchmark Expenditure 
                                    ") shall be deducted from the Vendor's share 
                                    of the gross sale proceeds as per point 8 (a) 
                                    below. 
                                    (c) The Project Feasibility Study is to be concluded 
                                    within 18 months from 20(th) February, 2022 
                                    and may be extended by a further 6 months if 
                                    during the initial 18 months there is a JORC 
                                    resource for the Project (the "Feasibility Study 
                                    Period") . 
---------------------  -------------------------------------------------------------------- 
 5) Decision                       (a) If a decision to mine is made by Galileo 
  to Mine and                       (a "Decision to Mine"), then the parties will 
  funding                           be entitled to fund pro rata to their beneficial 
                                    interest in the JV Company and will seek funding 
                                    for a mine. 
                                    (b) Should the Vendor elect not to fund their 
                                    25%, then their interest will be assumed on 
                                    a carried basis ("Vendor Funding") to be borne 
                                    by a specific purpose vehicle to be formed to 
                                    raise the funding amount as debt for the project 
                                    construction ("SPV FundingCo") and the SPV FundingCo 
                                    will recover the Vendor Funding from future 
                                    cashflows on terms and conditions to be agreed 
                                    upon by the parties to the Vendor Funding. 
                                    (c) The Vendor is not obligated to obtain the 
                                    Vendor Funding from the SPV FundingCo and is 
                                    at liberty to engage and obtain funding from 
                                    a commercial lending institution creating security 
                                    only to the extent of the Vendor's interest 
                                    in the JV company 
                                    (d) In the event that Galileo makes a decision 
                                    not to mine, the parties agree to seek to sell 
                                    the Project on the terms of point 8 below and 
                                    /or obtain a new investor. 
---------------------  -------------------------------------------------------------------- 
 6) No commitment       Galileo makes no representation or commitment 
  to Mine                to develop a mine and will only progress to 
                         the development of a mine if in their opinion 
                         the in-situ or primary material fulfil their 
                         requirements for investment. 
---------------------  -------------------------------------------------------------------- 
 7) Distribution        Upon commercial production the agreed and disclosed 
  of cashflows           debt ( indicative of the principal sum, interest 
                         per annum, instalments and duration/period) 
                         shall be deducted out of the daily of cashflow 
                         for debt servicing. The remaining amount available 
                         shall be paid 75% to Galileo and 25% to the 
                         Vendor net of operational costs. 
---------------------  -------------------------------------------------------------------- 
      8) Consequence                In the event of a third party sale of the Luansobe 
       of sale                       project and / or the JV Company after the Second 
                                     JV payment the gross sale proceeds will be distributed 
                                     as follows; 
                                     (a) First Priority: The Vendor will be entitled 
                                     to US$6,000,000 (the "Base Vendor Sale Consideration") 
                                     plus the Benchmark Expenditure Shortfall less 
                                     the Excess Benchmark Expenditure (the "Vendor's 
                                     Priority Return"). By way of example in the 
                                     event that prior to a sale no money has been 
                                     spent by Galileo on the Project Feasibility 
                                     Study Work then the Vendor's Priority Return 
                                     would equal U$10,000,000 (US$6,000,000 of Base 
                                     Vendor Sale Consideration + US$4,000,000 of 
                                     Benchmark Expenditure Shortfall); and 
                                     (b) Second Priority: After the Vendor has been 
                                     paid the Vendor's Priority Return the balance 
                                     of the sale proceeds shall be paid 75% to Galileo 
                                     and 25% to the Vendor. 
                                     The Vendor will have come along rights so Galileo 
                                     cannot sell without giving the Vendor the opportunity 
                                     to sell on the same terms on a pro rata basis. 
---------------------  -------------------------------------------------------------------- 
 9) Maintenance         Vendor to assist on an ongoing basis in maintaining 
  of Licence             the Licence in good standing with government 
                         agencies and local communities. 
---------------------  -------------------------------------------------------------------- 
 10) JV Committee       A joint venture committee shall be formed, comprising 
                         three representatives from Galileo and two from 
                         the Vendor. The chairman shall be a representative 
                         and appointee of Galileo. 
---------------------  -------------------------------------------------------------------- 
 11) JV Agreement       It is agreed by the parties that upon establishment 
  on establishment       of the JV Company the parties will enter into 
  of JV Company          a joint venture agreement in relation to the 
                         JV Company which shall encompass all of the 
                         commercial terms contained in the JV Agreement 
                         (the "JV Company Agreement"). The JV Company 
                         Agreement matters will consist of the following, 
                         but not be limited to the commercial terms outlined 
                         in the JV Agreement, grievance procedures, arbitration 
                         procedures, notices, joint venture committee 
                         functions, licence maintenance, SPV construction. 
---------------------  -------------------------------------------------------------------- 
 12) Information        Both parties shall from the signing of this 
  rights                 agreement be afforded full access rights to 
                         all information in relation to the Luansobe 
                         Project. 
---------------------  -------------------------------------------------------------------- 
 13) Zambia law         This agreement shall be governed by the laws 
                         of Zambia. 
---------------------  -------------------------------------------------------------------- 
      14) Assignment    Neither party shall assign the rights of this 
                         agreement to a third party without the permission 
                         of the other party. 
---------------------  -------------------------------------------------------------------- 
      15) Termination              This agreement will only be terminated if; 
                                    (a) The parties jointly agree in writing to 
                                    terminate the agreement; or 
                                    (b) If Galileo has given Notice Not to Proceed; 
                                    or 
                                    (c) If Galileo fails to meet any conditions 
                                    precedent. 
---------------------  -------------------------------------------------------------------- 
 

Technical Sign-Off

Technical information in this announcement has been reviewed by Edward (Ed) Slowey, BSc, PGeo, Technical Director of Galileo. Mr Slowey is a geologist with more than 40 years' relevant experience in mineral exploration and mining, a founder member of the Institute of Geologists of Ireland and is a Qualified Person under the AIM rules. Mr Slowey has reviewed and approved this announcement.

You can also follow Galileo on Twitter: @GalileoResource

For further information, please contact: Galileo Resources PLC

 
 Colin Bird, Chairman                 Tel +44 (0) 20 7581 
                                       4477 
----------------------------------  ---------------------- 
 Beaumont Cornish Limited - Nomad     Tel +44 (0) 20 7628 
  Roland Cornish/James Biddle          3396 
----------------------------------  ---------------------- 
 Novum Securities Limited - Joint 
  Broker 
  Colin Rowbury /Jon Belliss          +44 (0) 20 7399 9400 
----------------------------------  ---------------------- 
 Shard Capital Partners LLP -         Tel +44 (0) 20 7186 
  J oint Broker                        9952 
  Damon Heath 
----------------------------------  ---------------------- 
 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

Technical Glossary

 
 
   "ASCu"               Acid soluble (oxide) copper 
 "Indicated Mineral   That part of a Mineral Resource for which 
  Resource"            quantity, grade (or quality), densities, shape 
                       and physical characteristics are estimated 
                       with sufficient confidence to allow the application 
                       of Modifying Factors in sufficient detail 
                       to support mine planning and evaluation of 
                       the economic viability of the deposit. Geological 
                       evidence is derived from adequately detailed 
                       and reliable exploration, sampling and testing 
                       gathered through appropriate techniques from 
                       locations such as outcrops, trenches, pits, 
                       workings and drill holes, and is sufficient 
                       to assume geological and grade (or quality) 
                       continuity between points of observation where 
                       data and samples are gathered. (JORC 2012) 
 "JORC Code"          Australasian Institute of Mining and Metallurgy 
                       Joint Ore Reserves Committee code on mineral 
                       resources and ore reserves 
 
 "syncline"           An upwardly concave fold of a rock formation 
 "TCu"                Total copper 
 
 

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