Name and Location
Luiri gold project, Zambia.

Client
Luiri Gold.

Project Description
The project consists of two large-scale mining licences, 8074-HQ-LML (32 km²) and 14948-HQ-LML (245 km²), covering a total area of 277 km².

The Dunrobin and Matala gold deposits are located in 8074-HQ-LML, for which the licence was cancelled in July 2010. Upon its reinstatement in September 2011 a key condition of the renewal agreement with the Zambian government was that the company would December 14, 2013 “ . . . be in a position to complete project implementation, secure the requisite statutory permits for its operations, have started construction of the mining operation and have secured the requisite financing to complete a fully operational large-scale mine in line with the development plan, which shall be submitted to the Respondent [Ministry of Mines] within a reasonable period of time  . . .”

However, despite approaching several potential partners/funders the company was unable, in its own right, to secure funding to satisfy this development requirement. The company was, however, able to secure in a heads of agreement (HOA) with Bamboo Rock in December 2013, which enabled the company to satisfy this government-imposed funding deadline. Under this initial HOA Bamboo agreed to acquire 75% of the project, with Luiri retaining a 25% contributing interest.

Value
Not stated.

Duration
Not stated.

Latest Developments
During the half-year ended June 30, 2014, Luiri and Bamboo investigated various development alternatives and funding options to implementing the December 2013 HOA.

This included the company securing a confirmed development schedule from the Zambian government that tied the timing of the project’s development obligations to provision of an increased and upgraded electrical power supply to the Dunrobin project site.

Notwithstanding the development/power delivery concession from the Zambian government, the ongoing lack of clarity on the schedule for power availability remained a strategic development issue.

After considering several project development scenarios during the second half of the year the Luiri board concluded that the project did not offer an appropriate risk:reward outcome for the company to continue to commit funds.

As a result the Bamboo HOA was renegotiated so that Luiri sold 100% of the project to Bamboo, with this sale being approved by shareholders at the company’s annual general meeting on June 23, 2014.

Settlement of the sale was completed on June 30, 2014. As a result of the sale the company was relieved of current, noncurrent and contingent liabilities of about $520 000.

As at the half year ended June 30, 2014, Luiri’s interest in mining licences 8074-HQ-LML and 14948-HQ-LML had changed from 100% to 0% ownership.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Luiri Gold, tel +61 8 6313 5155, fax +61 8 9324 2977 or email info@luirigold.com.
Bamboo Rock, tel +255 78 602 6444