Afri-Can Marine Minerals Corp. and Deep-South Mining (Pty.) Ltd. have been informed by Teck Cominco Namibia Ltd., a wholly owned subsidiary of Teck Resources Ltd., that it has incurred the required exploration expenditures and payments and has exercised its option to earn a 70-per-cent undivided interest in the Haib copper project in Namibia.
In order to acquire its 70-per-cent interest, Teck had until Dec. 31, 2012, to incur exploration expenditures totalling $2-million (U.S.) and to incur optional non-cumulative cash payments to Deep-South totalling $700,000 (U.S.) over four years (please see July 2, 2008, news release at the company’s website). The exploration expenditures were incurred 16 months earlier than required pursuant to the agreement.
The remaining 30-per-cent interest in the Haib copper project will be divided equally between Deep-South and Afri-Can, and Afri-Can will exchange its interest in the property for 50 per cent of the common shares of Deep-South. Thereafter, Deep-South will seek a listing for its common shares on a Canadian exchange and on the Namibian Stock Exchange. Upon the listing of Deep-South, Afri-Can will transfer its common shares of Deep-South to Afri-Can’s common shareholders through a share dividend payment. The exact terms of the listing and dividend payment will be finalized in the coming weeks and will be subject to regulatory approval.
The original agreement with Teck stipulates that, upon Teck earning its 70-per-cent interest, Deep-South shall finance its 30-per-cent share of costs of the development of the project. In the event that Deep-South does not finance its share of an approved program, its interest in the joint venture shall be diluted and, should it be diluted to under 20 per cent, the remaining Deep-South interest will be converted into a 12-per-cent net profit interest (NPI). In the event that Teck should decide to bring the property into commercial production, Teck will pay a production bonus to Deep-South totalling $1-million (U.S.) within 60 days of the completion date of the mine. The agreement also states that the NPI and any production bonus will be divided equally between Deep-South and Afri-Can. Deep-South and Afri-Can have agreed to convert Afri-Can’s interest in any NPI and potential production bonus into shares of Deep-South.
Deep-South is currently in discussions with investment bankers in order to identify the best structure for the proposed listing, initiating the listing procedures and starting the initial financing process.
Teck is currently planning further work programs that will be disclosed to Afri-Can and Deep-South in due course.
John Akwenye, chairman of Deep-South, stated: “The decision of Teck to exercise the option 16 months earlier than the agreement shows a serious commitment to the project and its potential. We are proud to be one of the very first if not the first Namibian exploration company to seek a listing on international markets.”
Pierre Leveille, president and chief executive officer of Afri-Can, stated, “We are very happy with this early exercise as it will enable Afri-Can to unlock the value of this project for its shareholders while we continue to focus on our marine diamond projects.”
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 copper-molybdenum deposit hosted within a quartz-feldspar porphyry. Afri-Can filed a National Instrument 43-101-compliant technical report in October, 2004, entitled “The Haib Copper Porphyry Project, Namibia,” which is available on Afri-Can’s website.
Vivian Suart-Williams is responsible for the technical part concerning the Haib copper project of this news release and is the designated qualified person under the terms of National Instrument 43-101.
On another matter, Marcel Drapeau has resigned from the board of directors of Afri-Can. The board of directors acknowledges Mr. Drapeau for his strong commitment and professionalism for the last 15 years and thanks him for his contribution to Afri-Can.
Mr. Drapeau will continue to act as legal counsel to Afri-Can.
