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Australian-headquartered mineral exploration company, Oro Verde Limited (ASX: OVL) operates in Nicaragua since August 2014. The company holds 100 per cent interest in San Isidro Gold Project, which comprises a 25km2 mining concession in north-western Nicaragua and is situated adjacent to the La India Gold Project. The La India Gold Project is held by the UK company, Condor Gold Plc. and hosts a 2.3 million ounce of gold resource. The companyâs San Isidro Gold Project has the potential to contain La India-style vein-hosted epithermal gold mineralisation.
In a recent update on the ASX, Oro Verde notified about the completion of acquisition of an initial 20 per cent interest in Ugandan firm Rwenzori Rare Metals Limited (RRM), which holds 100 per cent interest in the Makuutu Rare Earths project.
Details of Acquisition
On 5th July 2019, Oro Verde informed that it has entered into a binding option agreement with Rare Earth Elements Africa and Rwenzori Rare Metals Limited to acquire up to a 60 per cent interest in the Makuutu project. The acquisition involved the following terms and conditions:
- Payment of USD 10,000 for a 30-day option period.
- Upon exercise of the option, the payment of USD 100,000 in cash and issue of USD 150,000 in Oro Verde shares, at a 30-day VWAP (volume weighted average price) in return for an immediate 20 per cent interest in RRM.
- OVL to contribute USD 1,700,000 of expenditure by 1 October 2020 to earn up to a 51 per cent staged interest in RRM as follows:
- To earn an additional 9 per cent interest for a cumulative 60 per cent interest in RRM, Oro Verde to fund the completion of a bankable feasibility study.
- There are milestone payments payable in cash or Oro Verde shares during the earn-in phase at the election of the Vendor, which are as follows:
- USD 750,000 on the Grant of Retention licence over RL1693 which is due to expire in November 2020;
- USD 375,000 on production of the 10 kg of mixed rare-earth product from pilot or demonstration plant activities; and
- USD 375,000 on the conversion of existing licences to mining licences.
- In case, Oro Verde did not continue to invest in the Makuutu project and project development ceases for at least two months, RRM holds the right to return the capital sunk by the company and reclaim all interest gained by Oro Verde.
To fund its initial commitments for the Makuutu project, Oro Verde has secured funding of AUD 750,000 (before costs) via a share placement to clients of Sixty Two Capital Pty Ltd and Patersonâs Securities Limited.
As Oro Verde has now acquired immediate 20 per cent interest in the Makuutu Project, it will shortly increase its stake to 31 per cent by contributing USD 650,000 to initiate an aggressive exploration program.
About Makuutu Rare Earths Project
Source: Companyâs Report (28th August 2019)
The Makuutu Project has the potential to be one of the largest ionic clay rare earth projects outside of China. The project comprises three licences covering around 132 km2, located 120 km to the east of the capital city of Kampala in eastern Uganda and approximately 40 km to the east of the regional centre of Jinja. The area has an outstanding infrastructure with nearby rail, cell-phone coverage, tarred roads, power and water as well as being easily accessible throughout the year regardless of weather conditions.
The geology of the Makuutu project is identical to the southern China ionic clay-type deposits, which are the most readily accessible and the cheapest source of heavy Rare Earth Oxides that are unearthed via rudimentary mining and processing techniques.
Ionic clay Rare Earth Projects differ significantly from hard rock Rare Earth projects in that, usually, rare earths generally present practical processing advantages and can be recovered from ionic clay mineralisation using mild leaching conditions. These types of deposits are scarce outside of China and consequently makes Makutu a strategic asset.
Recent Developments at Makuutu Project
Recently, the company reported that it has defined an Exploration Target of â270 â 530 million tonnes grading 0.04 â 0.1 % TREOâ at the Makuutu project.
The Exploration Target was based on reasonable grounds and assumptions and was conceptual in nature. The company mentioned that the current exploration is insufficient to assess a Mineral Resource, and it is uncertain if subsequent exploration will lead to the estimation of a Mineral Resource.
In August 2019, Oro Verde also completed the technical and legal due diligence on the Makuutu Project, that demonstrated substantial scale of the project. The confirmatory assays conducted on selected historical drilling samples validated the presence of rare earths in Makuutu mineralisation and the quantum of their original analysis.
A management and technical team has also been appointed by the company to advance the Makuutu Project, which includes the following members:
- Marc Steffens appointed as Executive Director;
- Mr Geoff Chapman appointed as Consulting Geologist; and
- Mr Hayden Buswell appointed as Consulting Metallurgical Engineer.
Oro Verde is set to commence diamond drilling at Makuutu project shortly to further increase its geological confidence in the deposit and provide mineralisation samples for ensuing metallurgical test work.
Stock Performance
By the close of trading on 23rd September 2019, OVL was trading at AUD 0.007 with approximately 2 billion outstanding shares. The stock has delivered a substantial return of 133.3 per cent in the last six months.
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