Oriole Resources PLC (AIM: ORR) spearheaded gains in the small-cap mining sector on Monday, following its announcement of a preliminary heads of terms (HoT) agreement with BCM International, a prominent mining and civil contractor from Ghana.
This initial agreement sets the stage for a forthcoming earn-in agreement, aimed at expediting the development of Oriole’s 92.2% stake in the Bibemi gold project located in northern Cameroon.
The Bibemi project is on track for swift progress under this agreement, with expectations to finalize the definitive earn-in agreement by the end of this year.
Highlights
· Non-binding HoT signed with BCM to enter into the Earn-In Agreement whereby BCM will earn up to a 50% interest in the Licence in return for the following staged commitments:
o Following execution of the HoT, BCM will, at its own cost, complete a period of due diligence (‘Due-Diligence Period’) at Mbe, ending no later than 31 January 2024;
o Following execution of the Earn-In Agreement and subject to a positive outcome of that Due-Diligence Period, BCM will pay Oriole US$1m cash payment (‘Signature Payment’);
o BCM will commit to US$4m in exploration expenditure, focused on defining Resources at the Licence;
o Further success-based payments from BCM to Oriole, the level of which is subject to the number of resource ounces reported under JORC.
· Subject to completion of the Earn-In Agreement, it is anticipated that maiden drilling will commence at Mbe in Q1-2024;
· Beyond these commitments, any further expenditure at Mbe will be on a contribute or dilute basis. In the event that Oriole’s percentage holding in the Licence falls below 5%, then its interest will convert to a 3% net smelter returns (‘NSR’) royalty on future production from the Licence;
· Drilling will be provided by BCM, under a separate contract, at cost plus 10% on an open book basis;
· Oriole will continue to manage the technical programmes, under a separate contract, and will provide its geological and administrative teams to BCM at cost plus 10%;
· Following signature of the HoT, Oriole has received a non-refundable payment of US$50k (the ‘Advanced Payment’), which shall be set off against the Signature Payment on execution of the Earn-In Agreement;
· The Earn-In Agreement is currently being drafted and is expected to be executed before the end of 2023 subject to the satisfaction of certain conditions precedent. Completion of the Earn-In Agreement will be subject to certain conditions;
· The Company will provide a further announcement upon execution of the Earn-In Agreement.
Drilling activities are slated to begin in the first quarter of 2024.
Following this news, Oriole Resources’ shares soared by 57% to 0.16p.
Tim Livesey, the CEO of Oriole Resources, commented: “We are thrilled to bring BCM on board as partners in the Bibemi project, especially after our successful exploration efforts culminated in Cameroon’s first JORC-classified gold resource in late 2022.
“We are encouraged that our project’s potential has been recognized and are eager to collaborate with BCM to expand and enhance the initial resource at Bakassi Zone 1, and to explore additional resources across the broader Bibemi license area.”
Conclusion: Today’s announcement is a transformative moment for Oriole, which has successfully generated highly prospective targets at Mbe and Bibemi, alongside the delivery of Cameroon’s first JORC MRE. The deeper pockets of BCM will provide Oriole, who is managing the technical programme, with the long-awaited opportunity to conduct step out drilling at Bibemi, which the Company believes holds the potential for a multi-pit operation. Mbe holds a 3km long anomaly where rock chip sampling has returned gold grades up to 134g/t. Mbe forms part of the Eastern CLP licence package, covering 2,266km2 of prospective ground. We rerate Oriole given the transformative nature of the deal, which values Bibemi at US$9m and Mbe at US$10m, with BCM’s support offering the opportunity to Oriole to develop two exciting assets in Cameroon.
*SP Angel acts as Broker to Oriole Resources
