JOHANNESBURG (miningweekly.com) – Tanzania focused exploration and development company Kibo Mining has completed due diligence on its Morogoro South gold-prospective exploration portfolio and has started its 50/50 joint venture (JV) activities with investing company Metal Tiger.

The portfolio, which consists of 18 licences, offers, applications and tenders, has a combined surface area of about 1 400 km².

On Thursday, the dual-listed miner reported that it had issued warrants to Metal Tiger for ten-million new ordinary shares in Kibo at an exercise price of 9p exercisable within a three-year term and subject to two exercise price increases, the first of which applied if Kibo shares traded at 18p or higher for 15 consecutive days. 

Further, Metal Tiger had transferred the first tranche of funds to cater for the ongoing licence fees and maintenance costs, totalling about $100 000, and would continue to do so for a minimum of one year and up to a maximum of three years. The full loan was estimated to be $800 000.

“This transaction means that all five of Kibo's projects are now active and, thus, have the potential to deliver value for our shareholders,” Kibo Mining CEO Louis Coetzee commented.

“For some time, Kibo has been focused on the company's lead projects at Rukwa coal-to-power, Imweru/Lake Victoria Goldfields and Haneti Nickel, [but] we have always considered the Morogoro Gold licence portfolio to be highly prospective and able to add further considerable value for shareholders with appropriate exploration and development progress,” he added.

Having Morogoro’s costs funded by Metal Tiger reduced Kibo’s expenditure, while maintaining a material exposure for shareholders in potential project upside.

Should Metal Tiger elect not to continue with the JV after the minimum term of one year, or fail to expend $100 000 by the first anniversary of the JV, or should Metal Tiger fail to expend the full expenditure by the third anniversary of the JV, the Metal Tiger’s 50% interest in the JV would revert back to Kibo subsidiary and owner of Morogoro Jubilee subject to them exercising a claw-back option.

If more than $300 000 of agreed expenditure was spent, Kibo would have the right to exercise the claw-back option in respect of Metal Tiger's interest in Jubilee, however; Metal Tiger shall retain a 10% free carry in the Morogoro South portfolio.

At any time following the first anniversary of the JV, on not less than 90 days' notice to Kibo, Metal Tiger could elect to cease sole funding of the JV expenditure.

Meanhwile, Kibo had also entered into a 50/50 JV with regard to its uranium-prospective tenements, known as the Pinewood portfolio, in Tanzania, with Metal Tiger.

The portfolio consisted of 43 licences, offers, applications and tenders with a combined surface area of about 9 033 km².

“Pinewood is highly prospective for uranium and the key to unlocking the value the project holds is to move it into active operational status. This announcement confirms the first step in that process, with ongoing costs to be funded by Metal Tiger enabling Kibo to benefit from future upside without the cost of operational activities.

“Recently there have been indicators of a potential recovery in the uranium sector and the restoration of operational activities at Pinewood, [which], if ultimately coinciding with a uranium market recovery, could prove highly value generative for both Kibo and Metal Tiger,” Coetzee advised.

The Pinewood uranium JV comprised the same terms as the Morogoro prospect.