AfNat/Rio Tinto JV to prospect in Mozambique

London, England — MININGREVIEW.COM — 11 June 2010 – Mining exploration company AfNat Resources Limited says it has signed a joint venture deal with mining group Rio Tinto “’ one of the world’s leading mining and exploration companies “’ to prospect in Mozambique, a revelation that sent AfNat shares soaring.

Reuters reports from here that AfNat’s shares on the AIM jumped 50% to three pence on the news, compared to a 1.7% increase in the UK mining index.

In terms of the AfNat deal, Rio will manage and pay for prospecting for copper, cobalt, nickel, platinum and gold on AfNat exploration sites in the Manica province of Mozambique.

Rio will spend US$5 million (R37.5 million) to gain a 51% interest in the joint venture, which will rise to 75% if it spends US$20 million (R150 million) more or submits a pre-feasibility study.

“Rio Tinto will provide both the capital and the management expertise to develop the company’s Mozambique assets,” an AfNat statement said. “The agreement significantly reduces the company’s liabilities in Mozambique, which is in line with our current strategy to minimise expenditure on our early stage exploration projects,” it added.

Last week, AfNat shareholders agreed an all-share takeover of their company by Canadian firm AXMIN. Following the issue of AXMIN shares, AfNat shareholders are due to own about 40% of the expanded AXMIN.

AfNat shares are due to be cancelled on AIM on June 14, the same day the new AXMIN shares are due to start trading on the TSX Venture Exchange.

AXMIN is also an exploration firm focusing on West and Central Africa, and has five prospecting permits in the Central African Republic.