Exploration Agreement with Mining Contractor

RNS Number : 1958J

Bezant Resources PLC

07 September 2016

 

7 September 2016

Bezant Resources Plc

("Bezant" or the "Company")

Exploration Agreement with Platinum and Gold Mining Contractor in Colombia

Bezant (AIM: BZT), the AIM quoted mineral exploration and development company, announces that it has entered into an exploration agreement (the "Exploration Agreement") with Exumax S.A.S. ("Exumax"), a Colombian based alluvial mining company, to secure its management services and expertise in respect of a planned 24-month exploration and development programme for the Company's near surface platinum and gold assets located in the Choco Region of Colombia (the "Colombian Projects"), over which it holds certain options. In connection with the Exploration Agreement, the Company has also agreed to acquire a special purpose vehicle, Birkenhead Estates S.A. ("Birkenhead"), which holds, inter alia, certain proprietary geological information and other data and intellectual property rights to be utilised by Exumax in performing its services under the Exploration Agreement.

Highlights:

·      Experienced Colombian mining contractors, Exumax, engaged, who will shortly mobilise to site in order to prepare for initial test pitting work on the Company's Colombian Projects

·      Exumax (www.exumax.co) is a private Colombian based company established in 2010 which is focused on the alluvial mining industry:

o  Utilises purpose built processing equipment, imported from New Zealand, for local alluvial, low cost precious metals projects

o  Senior management comprises both Australian and Colombian mining professionals

o  Six years' experience operating alluvial mining projects in Colombia

o  Emphasis on community relations and best practice environmental management

·      Restoration of historical local mining camp, including platinum and gold storage room, to be completed

·      Key objectives include:

o  Correlation of planned trial mining and exploration work with historical mining activities on the FKJ 083 licence area

o  Bulk sampling and exploration to commence in Q4 2016

o  Recovery of first platinum targeted for 2017

o  Determination of platinum and gold recovery rates and assessment of optimisation routes

o  Redevelopment decision for the potential advancement into full, near surface, platinum and gold mining operation to be made within 24 months

Exploration Work Programme

The initial focus of Bezant's planned exploration work programme with Exumax (the "Work Programme") will comprise the FKJ 083 licence area, being one of the Colombian Projects subject to the previously announced options held by the Company, which was historically mined between 2007 and 2012. The historical mining camp office, laboratory facilities and storage area are currently being renovated and prepared for use by Exumax which is in the final stages of mobilising its exploration equipment and personnel to site, with test production work targeted to commence within the next four weeks.

Bezant is well advanced with its analysis process, examining historical drilling and production data, and will work closely with Exumax in conducting its own exploration and bulk sampling tests. The key objectives for the Work Programme are to:

·      recover initial platinum and gold during 2017;

·      identify priority alluvial areas containing platinum and gold;

·      analyse historic recovery rates and determine whether the application of modern technology/processes can improve on the historical recoveries; and

·      assess and identify low-cost opportunities for rapid production ramp-up.

Exumax is a private Colombian alluvial mining company, with over 6 years' experience of operating mines in Colombia. It has a well-established and knowledgeable local team that can provide and manage a turnkey exploration and development solution for Bezant's wholly owned Colombian subsidiary, Ulloa Recursos Naturales S.A.S. ("Ulloa"). The principals of Exumax have over 50 years' of combined operating experience in the mining and construction industry in South America and have developed extensive proprietary mining expertise over this period. Exumax owns special purpose alluvial mining equipment which was developed in, and imported from, New Zealand, for use in low-cost alluvial extraction projects focused on precious metals, such as the Company's Colombian Projects. The Work Programme will be led by Exumax's Judd van den Brenk, a fluent Spanish speaker, with 6 years' alluvial mining experience in Colombia. Exumax prioritises community relations and best practice environmental management as key components to building successful mining operations in-country.

Summary of the agreements

Acquisition Agreement

A share purchase agreement (the "SPA") has been entered into between (i) the Company, (ii) Exumax's parent company Verona Investment Group Inc. ("Verona") and (iii) the founders of Verona, Judd van den Brenk, Karl van den Brenk and Pedro Martins da Costa (together, the "Founders").  Pursuant to the terms of the SPA, the Company will acquire the entire issued share capital of Birkenhead from Verona for wholly equity consideration comprising the issue of 7,201,745 new ordinary shares of 0.2 pence each in the capital of the Company ("Ordinary Shares") (the "Consideration Shares") to Verona, representing approximately 5 per cent. of the Company's enlarged issued share capital including the Consideration Shares.

The acquisition of Birkenhead, provides Bezant ownership of certain valuable proprietary data and related intellectual property rights developed by Verona and the Founders, including geological information, geographic mapping information, information in relation to environmental regulations and requirements, and the design of specialised alluvial mining exploration equipment, for use by Bezant and Exumax in conducting the Work Programme on the Colombian Projects. 

Pursuant to the SPA, a fee will be payable to the Founders at a rate of US$5,000 per month, to guarantee the performance of Exumax's basic obligations under the Exploration Agreement for a maximum period of 24 months, including the use of its in house team and specialised alluvial exploration equipment.

The Consideration Shares to be issued to Verona are to be subject to a 12 month lock-in period, which will preclude the sale or transfer of the shares to any third parties for a period of 12 months following the date of the SPA. The SPA also contains various warranties, including in relation to title and capacity, of the type customarily found in such agreements.

Whilst the agreement is legally binding, completion of the acquisition of Birkenhead remains subject, inter alia, to the delivery of certain ancillary legal documentation and the issue of the Consideration Shares.  The issue of the Consideration Shares and completion of the acquisition is therefore currently expected to occur on or around 20 September 2016 ("Completion") and a further announcement will be made in due course on Completion.

Exploration Agreement

The Exploration Agreement has been entered into between Exumax and Ulloa, to secure Exumax's management services and expertise for a planned 24-month exploration and development work programme, in respect of the Company's promising Colombian Projects, over which it holds options. 

Pursuant to the terms of the Exploration Agreement, Bezant has agreed to reimburse Exumax its monthly budgeted costs plus a 10 per cent. management fee incurred in conducting the mandated Work Programme and the provision of certain related accounting and administrative services.

Edward Nealon, Chairman of Bezant, commented:

"Contracting works well with the right partners and with aligned goals - in Exumax we have found such a partner. I have been seeking to establish a platinum production operation in Colombia for a long time, as I believe that the geological conditions and recovery potential are significant. Alluvial platinum, extracted using simple but well-built and efficient technology, offers a potential new production source for the metal, which is economically robust and not susceptible to high CAPEX and OPEX outlays. At Bezant, we are aiming to build a production portfolio for the group in order to drive the creation of shareholder value over time whilst seeking to minimise equity dilution as far as possible."

Pedro Martins da Costa, CEO of Exumax, commented:

"We are most excited to be progressing our working relationship with Ulloa and look forward to commencing testing of the potential production profile for Bezant's platinum and gold assets in Choco. It is, in our opinion, a highly prospective region for such precious metals and we will be one of the first groups to utilise modern mining and processing techniques in the area. Our task is to create an efficient, straight forward and low cost platinum production operation. We have a proven track record for implementing environmentally focused mining solutions, whilst working closely with local communities in Colombia and shall endeavour to continue to strengthen such community relationships."

Bernard Olivier, CEO of Bezant, commented:

"We are well advanced with our analysis of historical drilling and production data. The data cache acquired in January, following the exercise of our option over Leeward Islands Exploration LLC, containing historical mining and drilling results has been very important and we shall seek to further expand our geological and process knowledge in conjunction with the planned Exumax testing programme."

For further information, please contact:

Bezant Resources Plc Bernard Olivier Chief Executive Officer Laurence Read Executive Director / Communications Officer                            Strand Hanson Limited (Nomad)  James Harris / Matthew Chandler / James Dance Beaufort Securities Limited (Broker)  Elliot Hance or visit http://www.bezantresources.com

Tel: [phone] Tel: [phone] Tel: [phone] Tel: [phone]

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

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