ASX-listed Volt Resources has entered into a binding term sheet to conditionally acquire an 85% interest the Luiri Hill gold project in south-central Zambia.
The proposed acquisition of the Luiri project continues Volt’s progression in establishing a new gold business whilst progressing the development of its Bunyu graphite project in Tanzania.
Together with the proposed acquisition of the Guinea gold project announced on 14 May 2020, the acquisition of the Luiri project will provide Volt with a combination of highly prospective grass roots exploration in Guinea together with an 85% interest in an advanced gold project in Zambia that has near term development potential.
The creation of a new gold business provides Volt shareholders with the opportunity to participate in the potential value accretion from gold exploration and development activities, particularly through leveraging the company’s existing extensive networks in Africa.
“As a shareholder I am excited about the opportunity for Volt to develop its world class graphite business in Tanzania combined with the potential to become a gold producer in Zambia in the near future,” says Volt Resources chairman Asimwe Kabunga. He adds that the board is working with the management team to realise the company’s goal to transform Volt into a diversified mineral producer.
Our Zambian partners in the Luiri Hill project have the local knowledge and important relationships which can be utilised to add considerable value if the acquisition proceeds,” says Volt Resources MD Trevor Matthews.
He added that the project is at an advanced stage, supported by a number of studies.
“The opportunity to realise some cashflow from the sale of the existing on-site stockpiles to provide early funding is unique. Given the substantial increase in the gold price in the past year combined with the project’s potential supports the ability to debt fund the project development to minimise future equity requirements and can create real long-term value for shareholders,” says Matthews.
The Luiri project licences are held by two entities incorporated in Zambia – Cupriferous Resources holds a large scale exploration licence and with Bukimo Mining and the two companies jointly hold a mineral processing licence.
It is proposed that both entities will be acquired by an Australian parent entity which is to be incorporated by Volt prior to settlement, which in turn will be owned 85% by Volt and 15% by the project vendors.
The consideration for the acquisition of at 85% interest in the Luiri project comprises:
• The issue of A$3.75 million ordinary fully paid shares on settlement of the acquisition, with the number of shares to be issued calculated based on the five-trading day volume weighted average price of Volt securities on the ASX in the period immediately prior to settlement; and
• Payment of A$250 000 in cash within 30 days of settlement occurring.
Completion of the acquisition is subject to the satisfactory completion of Volt’s due diligence enquiries, the execution of a share sale agreement in a form acceptable to Volt, as well as the approval of Volt shareholders to the issue of the consideration shares. This approval will be sought at an upcoming meeting of Volt shareholders expected to be held in late June 2020.
While there will be no change to Volt’s board or management structure arising out of the proposed acquisition, the project vendors will be entitled to representation on the board of the Australian holding company, as well as the relevant Zambian subsidiary entities, as a consequence of their ongoing 15% interest in the Luiri project.
The project vendors have committed to assist Volt with government and local community engagement using their deep relationship with the local communities including the community leadership, as well as their invaluable connection within the Zambian government to ensure the partnership is able to successfully develop the project.
Project at a glance
The Luiri project is an advanced gold project with considerable drilling and studies already undertaken. The Matala and Dunrobin deposits, which collectively form the Luiri project, have the potential to be developed into a medium scale gold mine in the short term. The project was previously majority owned by Luiri Gold Limited, a company that was previously listed on the ASX until 2014, when it was sold by Luiri Gold to a South African company.
The project comprises one large-scale exploration licence and a mineral processing licence with a total area of 31.38 km2 within the Matala Dome mineralised structure. Access to the project area is by a bitumen sealed road from Lusaka. The area has significant potential for gold occurrences both related to the Matala Dome mineralised structure and the surrounding Katangan rocks where there is potential for iron oxide copper-gold style mineralisation.