PERTH (miningweekly.com) – The share price of ASX-listed Regal Resources spiked by nearly 89% on Friday, on news that the company was looking to acquire an initial 30% equity in an advanced copper/cobalt project, in the Democratic Republic of Congo (DRC).
Regal has signed a memorandum of understanding with Traxys Europe SA to acquire, explore and develop the Kalongwe copper and cobalt project.
The project is currently held by DRC-registered La Generale Industrielle et Commerciale a Congo SPRL (GICC), and Regal and Traxys have entered into a formal agreement to acquire an immediate 60% interest in the project, with the right to acquire a further 20%.
“Kalongwe presents an exciting opportunity for Regal, and appears to be an ideal project for the company in its current phase of development,” said Regal MD David Young.
“Not only does it provide Regal with exposure to a highly prospective copper project, but also limits, through risk sharing with a strong financial partner, the company’s level of investment commitment.”
Young noted that there was also an existing exploration and drilling database of substantial value that would enable Regal to rapidly advance a resource drilling phase, subject to the confirmation of the previous drilling results.
“Further, there is the potential to generate early cash flow from the semi-mechanised mining of outcropping mineralisation. Profits generated can be used to support future exploration programmes,” he added.
Under the terms of the agreement, both Regal and Traxys would gain an initial 30% interest in the project, with Regal taking responsibility for managing exploration activities.
The two parties would contribute on an equal basis to the $1-million acquisition costs, as well as $400 000 for the first phase of the exploration programme and would continue to fund the exploration on a 50:50 basis.
In the event that the project is developed, and Traxys has maintained at least a 30% equity share, the company would have offtake rights to the product, on terms to be mutaually agreed upon.
Regal shares were trading at a high of A$0.042 a share on Friday, up from an opening price of A$0.030 a share.