Argosy, which already owns an 18.35% stake of Andover, has agreed to acquire all the outstanding shares of Andover by exchanging four of its shares for every one Andover share. The Vancouver-based junior will issue a total of 53.4 million shares. Upon completion of the deal, Argosy will have about 95 million shares outstanding, or 97.5 million fully diluted. The company had $6.5 million in cash at year-end.
Andover controls the Musongati, Nyabikere and Waga nickel-cobalt projects through a protocol agreement. A full mining agreement, recently approved by the Burundi government, awaits final ratification. The agreement spells out a 15% government participation, an exploration program and regimes for tax and import duty exemptions to facilitate development of the project.
The Musongati deposit was discovered in 1972 and evaluated through to 1990. It occurs on three adjacent plateaus and comprises both limonite and saprolite material. The inferred resource is estimated to be 184.7 million tonnes grading 1.31% nickel, 0.08% cobalt and 0.17% copper.
Argosy says Musongati is metallurgically suited to low-cost acid leach technology. In a letter to shareholders, Argosy President Yale Simpson says Musongati is an attractive acquisition several reasons — “in particular, the low exploration risk, given the high quality of previous drilling, ore reserve estimations and metallurgical testwork.” He adds, “The cost of the acquisition is also favourable, allowing Argosy to control a major nickel resource while preserving working capital.”
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