Key points
- Teck Cominco Namibia can earn a 70-per-cent interest by spending $2-million (U.S.) on exploration and paying Deep South up to $700,000 (U.S.) over four years.
- Deep South may convert its retained 30-per-cent interest into a 2-per-cent net smelter royalty, split equally between Deep South and Afri-Can, once Teck Cominco earns its 70-per-cent stake.
- If Deep South’s interest is diluted below 20 per cent, its remaining stake converts to a 12-per-cent net profit interest split equally between Deep South and Afri-Can.
- Teck Cominco will pay a $1-million (U.S.) production bonus, split equally between Deep South and Afri-Can, within 60 days of the mine’s completion date if the project reaches commercial production.
Afri-Can Marine Minerals Corp. and Deep South Mining (Pty.) Ltd. have signed an option and joint venture agreement with Teck Cominco Namibia Ltd. whereby Teck Cominco will have an option to earn a 70-per-cent undivided interest in the Haib copper project in southern Namibia. The project comprises one prospecting licence held by Deep South. Afri-Can has terminated its pre-existing option with Deep South in consideration of certain payments under this agreement.
Under the terms of the option agreement, Teck Cominco will have the option to acquire a 70-per-cent indirect beneficial interest in the property by incurring exploration expenditures on the property totalling $2-million (U.S.) and incurring optional non-cumulative cash payments to Deep South totalling $700,000 (U.S.) over four years. Once Teck Cominco has acquired its 70-per-cent interest, Deep South will have the option to convert its 30-per-cent interest into a 2-per-cent net smelter royalty, payable to Deep South and Afri-Can as to 50 per cent each, or finance its 30-per-cent share of continuing exploration and development costs. In the event that Deep South does not finance its share of continuing costs and its share in the joint venture is diluted to less than 20 per cent, the remaining interest will be transferred into a 12-per-cent net profit interest payable to Deep South and Afri-Can as to 50 per cent each. In the event that Teck Cominco decides to bring the property into commercial production, Teck Cominco will pay a $1-million (U.S.) production bonus, payable to Deep South and Afri-Can as to 50 per cent each, within 60 days of the completion date of the mine.
The agreement is subject to approval by the Ministry of Mines and Energy of Namibia.
Pierre Leveille, president and chief executive officer of Afri-Can, stated: “We are pleased with this agreement as it is a sound financial transaction and it brings a major partner with expertise in developing copper projects. It enables Afri-Can to focus on our marine diamond activities, which remains our main expertise.”
The Haib Copper exploration licence is located in the Karas region of southern Namibia, eight kilometres from the Orange River and the South African border. Haib is a classic porphyry copper-molybdenum deposit hosted within quartz-felspar porphyry.
