The agreement is for the re-acquisition by Argonaut Resources of a 25% beneficial interest in the Lumwana West project earned by Antofagasta under an earn-in style option agreement that ran from April 2014 to October 2015. Antofagasta spent $3.9 million on regional exploration at Lumwana West during this period.
The Nyungu copper-cobalt deposit is part of the Lumwana West project located in north-western Zambia, 65 km south of the DRC border. The acquisition will increase Argonaut Resources’ interest in the deposit to 90%.
Argonaut Resources said it has agreed to make milestone payments and grant a net smelter royalty on the following terms: the payment of a $1 million fee at the start of the feasibility study and when the development decision is taken; the payment of $3 million at the start of production; and the granting of a 1.5% net smelter royalty on production.
In addition, Argonaut Resources will have the right to buy the net smelter royalty from Antofagasta for $4 million and Argonaut Resources will pay Antofagasta 25% of any sale proceeds in the event that the project is divested.
With regard to the Nyungu copper-cobalt deposit, Argonaut Resources highlighted that the Nyungu exploration target has the potential to host between 130 Mt and 180 Mt of copper at a grade range of 0.45 to 0.65%.
Argonaut Resources said further that it intercepted strong cobalt mineralisation from its first drill hole into the Nyungu deposit in 2011.
Cobalt occurs as an accessory mineral in many copper deposits located within the Central African copper belt. The copper belt straddles the border between Zambia and the DRC.
Argonaut Resources is an exploration and development company. Argonaut Resources operates the Torrens iron oxide copper-gold JV with Aeris Resources in South Australia, the Lumwana West copper-cobalt project with Chilean copper producer, Antofagasta in north-western Zambia and the Crescent Lake lithium project in Ontario, Canada.