Winmar Resources enters cobalt production JV in DRC

Winmar Resources (ASX: WFE) has expanded its cobalt footprint, inking a deal to acquire a 50% stake in the Luapula cobalt processing facility in the Democratic Republic of Congo.

The mineral explorer today announced it had entered into a binding heads of agreement with African Holding Investment Company (AHIC) to establish a new 50:50 joint venture to operate the 12,000 tonne-per-annum plant.

In addition, Winmar entered two further deals to acquire a portfolio of highly prospective cobalt exploration licences, which the company plans to develop to provide run-of-mine feed for the Luapula facility.

Legal and technical due diligence has been completed on the licences, with detailed exploration planning and budgets finalised and a team ready to commence activities on the completion of the acquisitions.

Winmar said it was also continuing to review other acquisition opportunities including nearby cobalt tailings projects and the purchase of third party high-grade cobalt feed.

The company made its first cobalt acquisition in January this year, acquiring three mining blocks making up the Gowganda cobalt project in Ontario, Canada from TSX-listed CBLT Inc.

Winmar chairman Jason Brewer said the new DRC acquisitions and the establishment of the joint venture, which includes assuming management and operation of the Luapula facility, will allow the company to “rapidly deliver on a DRC-focused cobalt strategy that has the potential to position us as we aim to be a future major primary cobalt producer”.

Consideration for Winmar’s 50% stake in the facility includes US$5.5 million in reimbursements of historic development expenditure and the issue of 100 million shares upon execution of the joint venture and development agreement.

The company has also agreed to issue a further 100 million shares on the commencement of production, and 100 million shares upon the plant exceeding 1000t of contained cobalt in concentrate sales.

An additional US$1.2 million is payable to acquire a 100% interest in the exploration licences, with 20 million shares to be issued upon the transfer of the licences to Winmar plus an amount of US$15 per tonne of ore mined to be paid upon production commencing.

Winmar said it planned to fund the upfront acquisition costs, as well as initial expenses of the Luapula facility and exploration and development activities on the licences, through a proposed A$8 million capital raising.

Luapula processing facility

Located on the outskirts of the town of Likasi in the DRC’s Haut-Katanga Province, the Luapula facility was constructed in 2014 at a reported cost of US$80 million.

It is a conventional copper-cobalt leaching plant with a design throughput of 250,000tpa of run-of-mine feed to produce up to 12,000tpa of high-grade concentrates (30-40% cobalt hydroxide and 15-20% copper hydroxide products) for sale into international markets.

In May 2018, Winmar appointed DRC-based metallurgical consultants Groupe EJKK to complete an independent audit and assessment of the facility.

The review, which included detailed capital, working capital and operating cost analyses and scheduling, concluded that an US$500,000 upgrade of the crushing and leaching circuit would be required.

According to Winmar, this work is set to be completed over a four to six month period.

In addition to its cobalt assets, Winwar’s portfolio includes a 70% stake in the Hamersley iron ore project in Western Australia in joint venture with Cazaly Resources (ASX: CAZ).