MRG Metals (ASX: MRQ) is set to add heavy mineral sands (HMS) to its diversified commodity base after clinching an agreement to acquire 100% of three high potential HMS projects in southern Mozambique, which is a recognised world-class HMS province.
Under the heads of agreement, MRG has 30 days to undertake due diligence.
If MRG elects to continue with the acquisition, it will have secured a pipeline of permitted projects. Previous wide-spaced drilling underpins the high prospectivity of the projects, with all of the 35 holes drilled to-date being mineralised – most from near surface.
Upon successful due diligence, MRG will also reimburse the vendors up to US$100,000 and issue 175 million shares as well as 175 million options.
Then, after reaching various project development milestones, MRG will issue the vendors further shares amounting to 720 million.
“Over the last few months MRG reviewed more than 70 projects in pursuit of a company making project and this acquisition has the potential to meet this objective,” MRG chairman Andrew Van Der Zwan said.
“The projects have enormous mineral potential and the acquisition price is based on significant project enhancing milestones, ensuring all shareholders will benefit from further successful drilling and project development,” he said.
Heavy mineral sands projects
The Corridor project is the most advanced out of the three HMS assets and encompasses 387 square kilometres. Western Mining Corporation has drilled across the project and intersected 36m grading 5.2% total heavy mineral (THM) from surface.
Another notable intersection was 87m grading 3.62% THM from surface, including a 27m interval with 6.8% THM.
The Corridor project is close to the operating Corridor 1 mineral sands mine.
Corridor 1 is producing about 500,000 tonnes per annum of ilmenite, 35,000tpa of zircon and 10,000tpa of rutile concentrate.
The project is also close to the advanced Chilubane deposit, which is at feasibility study stage.
Marao Marruca is the largest project comprising 491sq km about 50km from the coast. Rio Tinto (ASX: RIO) has drilled across the Marao licence but the Marracca licence remains unexplored.
During Rio’s shallow reconnaissance exploration program, grades up to 2% THM were returned from surface up to 10.5m depths.
Meanwhile, the smaller 113sq km Linhuane project is adjacent to the coast. Again, Rio previously undertook shallow drilling within the licence and returned 10m intersections grading between 5% THM and 25% THM.
Work programs, including geophysics and infill drilling will be started as soon as approvals are received, with MRG aiming to expediently establish a JORC resource.
As with other commodities that have spent the last few years languishing due to oversupply and low prices, the future for titanium mineral such as ilmenite and rutile is looking more positive as demand picks up and supply tightens.
Zircon, which is often a co-product or by-product of heavy minerals sands mining is also looking brighter, with that price, too, picking up due to similar dynamics.
In addition to the mineral sands assets, MRG is on the hunt for further “strategic opportunities” in Africa and other jurisdictions across the world.