Dual-listed iron-ore mining and base and precious metals exploration company IMX Resources reported in September that its joint venture (JV) partner in the Tanzania-based Ntaka Hill project, Loricatus Resource Investments, known as Fig Tree, has declared a positive outcome to its geotechnical work programme.
IMX previously noted that the geotechnical studies would be aimed at confirming and potentially enhancing the underground mining methods contemplated for the Sleeping Giant deposit at Ntaka Hill.
The positive outcome of this study triggered the $4-million second tranche payment by Fig Tree to IMX, in terms of the JV agreement. Fig Tree had already paid the first tranche of $2-million to IMX during the course of the year.
However, IMX said in September that Fig Tree was not in a position to effect payment of the deferred consideration of $4-million.
As a result, Fig Tree will revert to a 30% interest in the JV, as opposed to the 70.65% it planned to acquire under the initial agreement.
IMX now holds 70% of the Ntaka Hill project and has also assumed management and control.
IMX also has the right to buy back Fig Tree’s remaining 30% interest in the JV at the higher of Fig Tree’s investment cost and fair market value.
However, on the basis of the strong working relationship IMX has developed with Fig Tree and the value that Fig Tree has demonstrated it can add to the project, IMX agreed that, should the project ownership remain substantially unchanged prior to January 7, 2016 – for example, if IMX has not exercised the buy-out right or no alternative project funding transaction has been agreed – Fig Tree will be granted a further two-month period from January 7 to pay the deferred consideration of $4-million and continue with the transaction currently contemplated between Fig Tree and IMX.
IMX says that it is encouraged that Fig Tree’s geotechnical studies have not highlighted any material issues to potential future mining operations at Ntaka Hill.
“As such, IMX understands that Fig Tree continues to view the project as an attractive investment and is likely to re-engage in the future, should they have the funding to do so.”
That said, IMX has previously received a number of expressions of interest in respect of the Ntaka Hill project and, in the near term, will consider other options that may be available. IMX does not intend to use proceeds from its recent capital raising to fund the buy-out right of the remaining 30% of the project.
“While we had hoped to receive the deferred consideration, having successfully completed our recent capital raising, we are well positioned to continue to advance our flagship Chilalo graphite project, in Mozambique.
“While the buy-out right gives us some optionality to deal with others around
Ntaka Hill, we will not let the pursuit of an alternative transaction impede our progress towards achieving the significant upcoming milestones for Chilalo, which we believe is emerging as a world-class flake graphite project,” says IMX CEO Phil Hoskins.
Meanwhile, IMX notes that an earlier due diligence investigation and further technical review conducted by Fig Tree concluded that, at a concept level, the Ntaka Hill nickel sulphide deposit’s economics could be con- siderably enhanced by focusing on mining the higher-grade mineralisation, although this will limit the life of the mine.
No serious technical flaws were identified in the study that could inhibit the project’s development. The potential to use lower-cost, “fill free” open stoping methods for underground mining requires further geotechnical work in order to be properly considered.
In addition, the potential for the project to access regional grid power is a significant driver of value and this should, therefore, be a key focus of the feasibility study.
Previous work on the project did consider a high-grade, lower tonnage option and the Fig Tree investigation has further defined this potential (at even higher grades and lower production levels). The results of this work indicate that the project has excellent potential to be developed as a high-grade openpit and underground operation. A significant portion of the deposit is planned to be mined at surface.