Red Mountain Mining releases further encouraging exploration results
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Red Mountain Mining (ASX:RMX) entered a trading halt on Thursday pending the release of an update on the company’s Mokabe-Kasari Copper-Cobalt project. The results were released on Monday morning, and feature further evidence of high grade copper and cobalt mineralisation.
Located in the Democratic Republic of Congo, the 350 square kilometre project area is situated only 50 kilometres north of the world famous Tenke Fungurume copper cobalt mine.
The area is renowned for its high grade mineralisation, and laboratory results from reconnaissance grab samples have demonstrated an average cobalt grade of between 1.6% and 2.9%, as well as copper grading between 1.3% and 9.2%.
From a broader perspective the DRC supplies more than 60% of global cobalt, indicating the high prospectivity of the Mokabe-Kasari region.
Recent results continue to show promise, and it would appear that investors have been expecting encouraging news with the company’s share price increasing 18% last week before entering a trading halt.
Of course it should be noted here that this is an early stage play in a high risk region of Africa and share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Investors should seek professional financial advice if considering this stock for their portfolio.
Results indicate lateral spread and continuation of high grades
Further reconnaissance work leading up to the trading halt has included trenching and rock chip sampling, together with laboratory analysis. Rock chip samples continue to show high-grade cobalt with some near surface samples above 1%.
These included samples grading 1.1% and 1.5% cobalt. There were also some good copper cobalt combinations including copper grading 2.7% with the 1.1% cobalt sample. Five samples featured copper grades between 2.5% and 7.6%.
Commenting on these developments, Director Jeremy King said, “The recent results from trenching and rock chip sampling at Mukabe-Kasari continue to be highly encouraging for both copper and cobalt exploration with the results indicating a greater lateral spread and consistent high-grades within the project area.”
Based on these results RMX is of the view that the project warrants further investigation and the company is expecting further trenching and sampling results in June as part of final due diligence work.
King highlighted the fact that these sample results, within a region of prolific global operating Cobalt-Copper mines and recent world-class discoveries, make it an exciting area in which to be working.
Amendments to Tenure and Commercial Terms
In keeping with management’s decision to continue its involvement in the project, it has
entered into an amendment agreement with CoCu Metals Ltd in respect of the term sheet in place relating to the Mukabe-Kasari Cobalt-Copper project.
This will result in a more focused approach in terms of exploration initiatives, while maintaining maximum leverage opportunities for further involvement.
Following an extensive review, the Mukabe-Kasari Project is now proposed to comprise a total contiguous land package of 116 square kilometres as shown below.
King noted that this revised agreement provided a more targeted approach, while preserving the optionality required for a highly prospective exploration project.
In terms of the agreement, RMX’s exclusivity period over the project is extended to June 30, 2017 in order to finalise due diligence. Importantly, this rescheduling will allow RMX to obtain final sample results, complete tenure paperwork and conduct a thorough site visit with CSA Global Pty Ltd in order to assist and complete the project assessment.
Revised earn-in terms which are considerably more favourable for RMX have also been agreed upon. In terms of the agreement, RMX has the right, solely at its election, to earn-in to the project by way of incurring expenditure over three phases.
An investment of $250,000 in exploration will see RMX and CoCu have an equal 50-50 interest in the project. Investment of a further $250,000 by RMX will increase its interest to 70%, while a further $250,000 will boost its ownership stake to 80%.
From an equity perspective RMX will issue CoCu with 2 million shares upon the company exercising its right to earn into the project and entering into formal joint-venture documentation. A further 1 million shares will be issued on each instance if and when RMX increases its interests to 70% and 80%.
Should RMX move to an 80% interest in the project, the joint venture will be a customary pro-rata contributing arrangement, provided that RMX has the right to acquire the remaining interest in the project for a $3.5 million cash and share consideration, with a 1% NSR over the project.