TSXV-listed Namibia Critical Metals, through its wholly-owned subsidiary Kunene Resources Namibia, has signed an agreement with a private Namibian group to allow the pegging of a mining claim covering a small manganese occurrence within EPL 4347 which is held by the company.
Namibia – The agreement will allow the group to develop a small scale mining operation to exploit a manganese occurrence within Kunene copper cobalt project area in return for a sliding scale royalty payable to the company based on the grade of concentrate produced and prevailing commodity prices.
Cash flow from royalty payments will contribute to continued exploration and development of the company’s Kunene copper cobalt project.
The manganese occurrence was discovered by Kunene Resources in 2013 and evaluated over a three-year period as the Olulilwa manganese project.
A comprehensive exploration programme comprised of detailed surface mapping and diamond drilling was undertaken in 2016 to consider the technical and financial feasibility to mine the occurrence by open pit methods and to build a pilot plant to produce manganese concentrate. It was concluded that the Olulilwa manganese beds had the potential to be developed into a small-scale manganese mine and deemed to be too small for Namibia Critical Metals to develop but is economic for small scale producer.
The company re-logged diamond drill core from the 2016 programme and re-sampled to determine if any potential for base metals exists in the area covered by the manganese occurrence. Results do not indicate any mineralisation of economic significance for copper, lead, zinc or other metals of interest outside of manganese.
This arrangement allows for the benefits of future commercial production to be realised by local enterprises and advances small scale mining operations within Namibia.
“We are pleased to have reached this agreement which can provide meaningful jobs and cash flow to a Namibian company while at the same time monetising a small-scale mining opportunity not of primary interest to the company. With success, the operation will provide Namibia Critical Metals with some modest cash flow which will support our larger scale operations in the area,” says Namibia Critical Metals CEO Pine van Wyk.
Provisions of the agreement
Under the terms of the agreement it is contemplated that the group will acquire the mineral rights for the exploitation of manganese over a small area covering the known extents of the manganese occurrence through application to the Ministry of Mines and Energy for a mining claim.
The group will also have the right to establish a works area to provide for the installation of ancillary equipment to support development of the mining operation. The agreement will remain in effect so long as the group retains its rights in accordance with the Minerals Act. Namibia Critical Metals will relinquish its mineral rights over the area covered by the manganese mining claim.
As consideration for the consents given by Namibia Critical Metals, the group will pay a royalty in respect of the manganese extracted calculated as a sliding scale royalty ranging from 1-5% tied to the percentage grade of the manganese and to the US dollar price achieved for the sale of each dry metric ton unit of manganese which is the internationally agreed-upon unit of measure for manganese ore pricing. The royalty is capped at N$100 (approximately CDN$10) per dry metric ton.
All costs and liabilities pertaining to the mining operations will be borne by the group.