After completing due diligence, MRG Metals (ASX: MRG) has locked-in its three heavy mineral sands projects in Mozambique with a decision to pursue the acquisition.
However, the deal remains dependent on share holder approval which will be sought in late June.
If MRG Metals gains share holder approval it will put US$100,000 towards the projects’ vendor Sofala Resources’ loan. MRG Metals will also issue 175 million shares and 175 million options.
Further shares amounting to 720 million are payable upon MRG Metals reaching certain milestones including electing to proceed with a pre-feasibility study.
“The company is pleased to have successfully completed the important due diligence process and will now progress to formal acquisition via shareholder approval, anticipated prior to the end of June,” MRG Metals chairman Andrew Van Der Zwan said.
“This acquisition will provide MRG Metals with a pipeline of projects in a world class heavy mineral sands province,” he said, adding the company would update shareholders shortly on additional information it had gleaned on the projects.
If shareholder approval is secured, then the company plans to begin exploration in the September quarter.
Heavy mineral sands projects
MRG Metals secured the projects after reviewing more than 70 potential candidates.
Exploration has been undertaken across the three heavy mineral sands assets which comprise: Corridor, Marao Marruca and Linhuane.
Corridor is the most advanced project and covers 387 square kilometres. Western Mining Corporation was the previous owner and drilled across the ground and intersected 36m grading 5.2% total heavy mineral from surface.
The largest asset is Marao Marruca which encompasses 491sq km and is 50km from the coast. Rio Tinto drilled across the Marao part of the licence but the Marruca licence remains unexplored.
Linhuane is the smaller project and includes 113sq km of land adjacent to the coast. Rio Tinto previously owned this project and carried out shallow drilling which returned multiple 10m intersections containing between 5% total heavy mineral and 25% total heavy mineral.
As part of the acquisition, MRG Metals plans to expediently establish JORC resources across the new assets.
By late afternoon trade, the company’s share price had slid more than 8% to rest at A$0.011.