Banff Resources (VSE) intends to buy all the issued and outstanding shares of Kasese Cobalt owned by the LaSource Group, a member of Australian-listed Normandy Mining Group.
The LaSource Group has a 55% interest in the Kasese cobalt project in western Uganda. To acquire this, Banff will issue 21.7 million shares of its stock to LaSource at a price of $1.54 per share. Included in the deal are 12.1 million warrants, which can be exercised at a price of $1.54 each for the first year and $1.77 in the second.
The Kasese project consists of 900,000 tonnes of pyrite concentrates assaying about 1.38% cobalt. The concentrates come from the nearby Kilembe copper mine.
The mine was operated by Falconbridge and later by the Ugandan government, from 1956 to 1978. The cobaltiferous pyrite concentrates were never marketed, but, rather, stockpiled at the Kasese railroad terminal 15 km away.
The company plans to process the concentrates and produce 1,000 tonnes of cobalt cathode per year. Operating expenses are estimated at US$4 per lb., with startup scheduled for early 1998.
Banff also has an option to obtain a controlling interest in the Kilembe mine, which contains 7.2 million tonnes grading 1.6% copper at a 0.6% cutoff.
Banff has 3.6 million shares outstanding.
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