JOHANNESBURG (miningweekly.com) – The share price of Aim-listed exploration company AfNat surged by 50% in London on Wednesday morning, after the company announced that it was forming an exploration joint venture (JV) with a subsidiary of the Rio Tinto group.

The company’s share price rose to £0,03 a share in early morning trade, up 50% on Tuesday’s close of £0,02 a share.

AfNat and Rio Tinto Minerals Development have entered into a JV agreement, in terms of which Rio Tinto would manage and develop AfNat’s exploration licences in Mozambique. It would explore for copper, cobalt, nickel, platinum, gold and associated minerals and metals.

Rio Tinto would invest $5-million in exploration expenditure to earn an initial 51% stake in a newly formed JV company, with AfNat holding the balance.

“The joint-venture agreement signed with Rio Tinto today is an extremely positive development for the company, and for its prospects in Mozambique. Rio Tinto will provide both the capital and the management expertise to develop the company's Mozambique assets and, we hope, further down the line, bring the company's licences in the country into full production,” AfNat CEO George Roach noted in a statement.

Rio would have the option to increase its stake in the JV company to 75% by funding a further $20-million of exploration expenditure or by submitting a prefeasibility study to the JV company’s board for approval.

Following this, each party would contribute funding on a pro rata basis or face dilution.

If any of the parties’ interest in the JV fell below 10%, the holder of the 90% interest would be entitled to a call option to buy the remaining shares.

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