Key points
- Afri-Can can acquire up to a 70-per-cent undivided interest in the Haib copper deposit, an exclusive prospecting licence in southern Namibia near the South African border.
- Under the amended terms, Afri-Can will pay Deep South $200,000 cash plus $50,000 in shares on signing, and $250,000 upon completion of the phase 1 drilling program.
- Afri-Can must spend a minimum of $3-million on exploration to earn a 55-per-cent interest, then pay $1-million on completion of a positive feasibility study to reach 70 per cent.
- Afri-Can will hold a call option on 20 per cent of Deep South’s remaining interest for $2-million cash plus a 1-per-cent net smelter royalty, exercisable for up to 36 months after the feasibility study.
Afri-Can Marine Minerals Corp. has signed an amended agreement with Deep South Mining Pty. Ltd. with regard to the option to acquire a 70-per-cent undivided interest in the Haib copper deposit in Namibia. The Haib exclusive prospecting licence is located in the south of Namibia near the South African border.
The previous agreement, announced last year, contemplated completion of a revised feasibility study. The amended agreement reflects the reality of Haib’s status as an advanced exploration project. During its due diligence, Afri-Can determined that the feasibility study completed by the previous owners of Haib was insufficient to support either the scale of production or financing of the type contemplated in the previous agreement. Afri-Can has discovered, however, that higher-grade sulphide and oxide portions of the Haib deposit had not been separately delineated, and that the development potential of these higher-grade portions of the deposit is substantial. The project is now being redesigned to delineate these specific portions of the deposit. Details of the exploration program will be disclosed when the planning process has been completed.
Material terms of the amended agreement are as follows (all amounts are expressed in Canadian dollars):
a cash payment to Deep South of $200,000 and $50,000 of Afri-Can
shares upon signature of the amended agreement;a cash payment of $250,000 to Deep South upon completion of the
phase 1 drilling program;
cash payments to Deep South of $200,000 per year for five years,
with the first such payment on the one-year anniversary of the
second $250,000 payment noted above;exploration expenditures to a minimum of $3-million. Upon the
satisfaction of this condition, Afri-Can will be deemed to have
acquired an undivided interest of 55 per cent in Haib;upon completion of a positive feasibility study, Afri-Can will make
an additional cash payment of $1-million to Deep South. Afri-Can
will be deemed to have acquired an additional undivided interest of
15 per cent in Haib. The total undivided interest of Afri-Can shall then be
70 per cent. Financing thereafter will be on a pro rata basis;upon the commencement of mining operations, Afri-Can shall make a
further cash payment of $1-million to Deep South; andAfri-Can shall have a call option on 20 per cent of Deep South’s remaining
30 per cent interest (that is, two-thirds of Deep South’s holdings) for a cash
payment of $2-million and a 1-per-cent net smelter royalty, such option
being exercisable for a period of up to 36 months following
completion of the feasibility study.
- a cash payment to Deep South of $200,000 and $50,000 of Afri-Can
shares upon signature of the amended agreement;
- a cash payment of $250,000 to Deep South upon completion of the
phase 1 drilling program;
- cash payments to Deep South of $200,000 per year for five years,
with the first such payment on the one-year anniversary of the
second $250,000 payment noted above;
- exploration expenditures to a minimum of $3-million. Upon the
satisfaction of this condition, Afri-Can will be deemed to have
acquired an undivided interest of 55 per cent in Haib;
- upon completion of a positive feasibility study, Afri-Can will make
an additional cash payment of $1-million to Deep South. Afri-Can
will be deemed to have acquired an additional undivided interest of
15 per cent in Haib. The total undivided interest of Afri-Can shall then be
70 per cent. Financing thereafter will be on a pro rata basis;
- upon the commencement of mining operations, Afri-Can shall make a
further cash payment of $1-million to Deep South; and
- Afri-Can shall have a call option on 20 per cent of Deep South’s remaining
30 per cent interest (that is, two-thirds of Deep South’s holdings) for a cash
payment of $2-million and a 1-per-cent net smelter royalty, such option
being exercisable for a period of up to 36 months following
completion of the feasibility study.
For comparison, the material terms of the original agreement were as follows.
To acquire the option on the Haib project, Afri-Can would have incurred the following payments:
a cash payment of $100,000 upon regulatory approval of the
agreement; anda cash payment of $500,000 upon completion of favourable due
diligence within 120 days of regulatory approval.
- a cash payment of $100,000 upon regulatory approval of the
agreement; and
- a cash payment of $500,000 upon completion of favourable due
diligence within 120 days of regulatory approval.
To exercise its option, Afri-Can would have incurred the following exploration expenses and made the following payments.
Within two years following the completion of its due diligence, Afri-Can would have incurred expenditures to a minimum of $2-million in
exploration activities in order to prepare an updated bankable
feasibility study.No later than 30 days after completion of a bankable feasibility
study, Afri-Can would have issued $5.5-million of its common shares
to Deep South at a market discount of 10 per cent and two million warrants
exercisable at a market premium of 30 per cent for a period of
three years. Upon completion of production financing for the project, Afri-Can
would have made a final cash payment of $5-million.Further to the acquisition of 70 per cent by Afri-Can, Deep South would
have had an option to sell its remaining 30-per-cent interest for a cash payment of
$5-million and a 2-per-cent net smelter royalty.
- Within two years following the completion of its due diligence, Afri-Can would have incurred expenditures to a minimum of $2-million in
exploration activities in order to prepare an updated bankable
feasibility study.
- No later than 30 days after completion of a bankable feasibility
study, Afri-Can would have issued $5.5-million of its common shares
to Deep South at a market discount of 10 per cent and two million warrants
exercisable at a market premium of 30 per cent for a period of
three years.
- Upon completion of production financing for the project, Afri-Can
would have made a final cash payment of $5-million.
- Further to the acquisition of 70 per cent by Afri-Can, Deep South would
have had an option to sell its remaining 30-per-cent interest for a cash payment of
$5-million and a 2-per-cent net smelter royalty.
The amended agreement is subject to the approval of Canadian regulatory authorities.
Pierre Leveille, president and chief executive officer of Afri-Can, stated, “We are pleased with this amended agreement, as it reflects better the more prospective status of the project and the project is economically more attractive.”
The Haib copper deposit is an exclusive prospecting licence (EPL No. 3140) covering 74,563 hectares and is located in the Karas region eight kilometres from the Orange River in the south of Namibia. The project contains a large porphyry copper-molybdenum deposit hosted within quartz-felspar porphyry. The National Instrument 43-101 technical report completed on Oct. 22, 2004, confirms that the indicated resource in the higher-grade section of the deposit totals 292 million tonnes grading 0.46 per cent copper, equivalent to in excess of 2.9 billion pounds of copper in situ.
