Galileo Resources plc has announced that it has entered into a conditional agreement with Siege Mining Ltd, in relation to the ceding of ownership and operation of the Star Zinc Project.
Under the agreement, Siege has agreed to pay Galileo US$750 000 – US$200 000 in relation to the large scale exploration licence 19653-HQ-LEL, and US$550 000 for Galileo ceding its participation in the Star Zinc Project and all exploration information which it has in relation to the Star Zinc Project. Galileo will also be paid a royalty (proportion share) based on future sales of zinc from the Star Zinc Project for Galileo allowing Siege to use Galileo’s information, know-how and commercial experience in relation to the Star Zinc Project.
Galileo has entered into the agreement following a period in which its stakeholders reviewed the options for putting the Star Zinc Project into operation, taking into consideration operational, community, and regulatory issues associated with the mining project, which is located on the outskirts of Lusaka, Zambia. Allowing ownership and operational responsibilities to be assumed by a Zambian mining company, whilst Galileo remained a participant in the future success of the Star Zinc Project, was a key topic of discussion.
Highlights of the agreement:
- Project to be operated by a Zambian mining company: The conclusion of the review was that the project is best operated by a local Zambian Mining Company. Siege is a Zambian owned mining company and it and its principals, including Joakim Chewe Chelelwa, have applied for/are in the process of being granted the requisite licences within the Star Zinc Project area to allow them to conduct mining activities. Under the agreement the Star Zinc project will be operated by Siege, as a Zambian community focussed project, appropriate to a project located near an expanding urban area near Lusaka.
- Payment of consideration: US$50 000 will be paid upon completion and US$70 000 paid at the later of 90 days from: i) the signing of the agreement, and ii) completion. Completion will occur once the Star Zinc Project Licence has been assigned to Siege.
- Royalty payable to Galileo: Galileo will be paid a royalty on any future sales of zinc from the Star Zinc Project based on the zinc grade. The minimum royalty rate is 3% and increasing by 1% for each US$250 increase in the zinc price above US$2500/t up to a maximum of 10%. The current LME price for zinc is US$2786/t based on the London Metals Exchange closing cash price on 3 March 2021 being the last practical date before this announcement. If the Zinc concentrate grade is 25% for a sale at a zinc price of US$2500/t this would result in a royalty of US$18.75/dmt whereas if the Zinc concentrate grade were 30% a sale at a zinc price of US$2500/t would result in a royalty of US$22.50/dmt.
Colin Bird Chairman & CEO said:
“The Star Zinc project is a small but high-grade deposit situated in the expanding outskirts of Lusaka in Zambia in relative close proximity to housing, schooling, and social amenities. The project lends itself to highly selective mining in a small area and as such is suitable for a small scale community project involving artisanal mining operations and sorting of ore offsite. Galileo has interacted with stakeholders to develop a solution for the mining and operation of the project which will benefit all stakeholders with Siege a local Zambian mining company taking on the operation of the project whilst having access to Galileo’s information, know-how and commercial experience.”
Read the article online at: https://www.globalminingreview.com/finance-business/08032021/galileo-to-sell-star-zinc-project-to-siege-mining/