Natural resource development company Red Rock Resources will increase its interest in a joint venture company (JVCo), which will be formed for the exploitation of copper and cobalt tailings and dumps near Kolwezi, in the Democratic Republic of Congo (DRC), to 50.1%.
Pursuant to the agreement, Red Rock has made the initial payment of $50 000 and conducted due diligence, which included drilling and testwork.
In accordance with the terms of the agreement, an adjustment is being made by Red Rock’s local partner Vumilia Pendenza (VUP) to ensure that the areas comprising the project have acceptable quantities and grades of mineralisation.
This may involve adding areas, while also dropping certain areas and substituting others, the company said on Thursday.
Minor adjustments have, meanwhile, been made to the agreement to reflect the passage of time and the opportunity cost borne by Red Rock, which have the effect of slightly reducing the overall cost and simplifying the transaction.
The immediate counterparty has been changed from an Isle of Man company to a Congolese company, Bring Minerals SAU (BRO).
Amendments to the agreement comprise Red Rock acquiring 50.1% on completion, instead of 26.25% of the JCVo for a cash payment of $700 000 upon BRO providing proof of its rights over the project owned by VUP.
Of the overall amount, £490 000 is payable in Red Rock shares at 0.7p a share, with attached one for one three-year warrants to subscribe for new shares at 1p.
Additionally, the obligation that Red Rock has to fund $1.2-million of exploration expenditure over 18 months to produce a bankable feasibility study (BFS), is removed.
Instead of Red Rock having six months within which to elect to pay $1-million to farm in to a further 26.25% of JVCo, bringing its interest to 52.5%, after a BFS is completed, Red Rock holds 50.1% immediately on completion and $1-million will be paid as a post-completion obligation if and when commercial production begins.
Whereas before a 0.4% royalty was due to a partner but could be bought out, the buyout provision has been deleted but Red Rock will also enjoy a 0.4% royalty.
“We are satisfied with the results of our due diligence inquiries to date and, provided that proof of rights to the resource can be provided at completion, we expect the transaction to proceed. We welcome the adjustment in terms we have been able to negotiate with our partners,” Red Rock chairperson Andrew Bell commented.