Bezant Resources (AIM: BZT) has agreed to acquire a 90% stake in Namib Lead and Zinc Mining for US$2.5 million plus royalties, securing an existing processing plant to fast-track development of its Hope and Gorob copper-gold project in Namibia by at least two years. The move avoids the cost and permitting requirements of building a new facility.
Highlights
· The acquisition of the NLZM Processing Plant removes the longest lead item in the Hope and Gorob mine plan, and accelerates production by at least 2 years, whilst eliminating of the significant capital cost required to build a processing plant of this type.
· The structure of the Agreement is a USD2.5m payment on completion together with royalty payments based on processing plant throughput and copper and other ore sales.
· The acquisition of NLZM Processing Plant provides Bezant with a multi-purpose facility, which can be utilised to treat the copper and gold ore from the Hope and Gorob mine and also at a future date the zinc – lead – silver ore identified in the associated underground mine owned by NLZM.
· RoM material from the Hope and Gorob mine will be processed at the mine site using dry ore sorting technology to be established at the mine site and which has been the subject of pilot testing. This pre-concentration step is designed to reject marginal or low-grade ore, thereby upgrading the feed and significantly reducing the tonnage hauled and associated cost to the NLZM Processing Plant.
· Considerable exploration potential exists between Hope and Gorob and its various strike extensions over more than 97 strike kilometres and upon commencement of the operation confirmatory resource drilling will commence with a target in excess of 500,000 tonnes of contained copper.
· The NLZM recommencement will result in job creation in the Swakopmund area with a pool of experienced previous plant operators immediately available
· As part of the process of obtaining shareholder approval to the Share Purchase Agreement the Company will be providing a technical report which will include a third party independent Financial Model which takes into account the acquisition costs of NLZM and the future royalty payments to the Vendor and at a discount rate of 10%, yields a Net Present Value (NPV) of USD46.8 M and an Internal Rate of Return (IRR) of 63%, indicating strong financial viability and investor appeal.
· Discussions are advancing on multiple options available for the financing package to develop the Hope and Gorob Project. The discussions range between debt or equity or a combination thereof, prepaid finance is also being considered as an addition or substitute within the package.
The plant will process pre-concentrated ore from Hope and Gorob using dry ore sorting to reduce haulage costs and environmental impact, and it could also treat NLZM’s zinc-lead-silver ore. An independent valuation estimates the project’s net present value at US$46.8 million with a 63% internal rate of return. Bezant is in discussions to fund the wider mining operations through debt, equity, or prepayment arrangements.
Colin Bird, Executive Chairman of Bezant, commented.
“The agreement to acquire the NLZM plant is a pivotal move in developing our Hope and Gorob resource. The plant has undergone significant test-work and is fit for purpose, notwithstanding the fact that the Company intends to upgrade certain aspects of the plant flow sheet to further improve efficiency and productivity. Upon commencement of production and the generation of free cashflow we intend to explore the mineralisation between Hope and Gorob and along the remaining 97km of prospective strike length with a view to develop a significant mining resource in excess of 500,000 tonnes of contained copper equivalent.
During the previous two years of permitting we have designed what is the ultimate operational plan and all aspects of production have been established. On key sensitivities we have carried out the appropriate test-work including pilot scale test-work on ore sorting, which proved to be very positive. We are now advancing all underlying key contracts to signing and intend to commence production as soon as physically and practicably possible. The proposed timing of this operation coincides with a high demand for copper against real global shortages and this operation and will assist Namibia in its drive to encourage small and medium scale mining in the country. We will continue to keep shareholders informed of material changes or progress as we develop the project.”
