Krakatoa Resources to acquire up to 80% interest in major Georgian antimony-gold project

Krakatoa Resources (ASX: KTA) has entered into an exclusive option to acquire up to an 80% interest in the mining licence covering the significant Zopkhito antimony and gold project located in Georgia.

The lightly explored Zopkhito contains an estimated 225,000 tonnes at 11.6% antimony for a contained 26,000t of antimony and 7.1Mt at 3.7 grams per tonne for 815,119 ounces of gold.

While 27 kilometres of previous exploration adits have so far defined significant antimony and gold mineralisation, only 16 of the known 60 or more mineralised veins have been investigated.

Soviet history

Exploration of the Zopkhito deposit commenced in 1929 and continued until 1979 under the management of the Soviet Department of Metallurgy.

The project lay dormant after the collapse of the Soviet Union in 1989 until exploration work resumed between 1998 and 2000.

Eastern Mediterranean Resources (EMED) then acquired the rights to the Zopkhito deposit and carried out an extensive re-sampling program.

EMED also remodelled the vein systems, confirming the reliability of the 1957 Soviet report and in 2007 and 2008 disclosed resource estimates for Zopkhito based on the newly acquired data.

Agreement details

Krakatoa has the option to acquire an 80% interest in Zopkhito anytime within the initial option period of 12 months, with the ability for an additional 12-month extension at the company’s election.

The company has the option during this period to undertake exploration and mine studies on various development options for the project.

Krakatoa has also agreed to allocate a minimum of $3.1 million (US$2m) to exploration and development activities.

Option fee

The consideration comprises an initial option fee of approximately $156,000 (US$100,000) and an additional payment of the same amount to extend the option period.

Krakatoa can acquire an 80% project interest at any time during the option period by payment of approximately $10.9m (US$7m).

Subject to shareholder approval, the company has agreed to pay a facilitation fee of 20 million shares and 20 million options exercisable at $0.05 on or before two years from the date of issue for introducing the project to the company.

Capital raising

To help fund the proposed acquisition, Krakatoa has received firm commitments from sophisticated and professional investors to raise approximately $1.28m.

The transaction will see just over 128 million Krakatoa shares issued at $0.01 each and includes firm commitments totalling $100,000 from directors.

Funds will be directed towards exploration activities at Zopkhito, costs of the 12-month option period and ongoing working capital for the project.