PERTH – Goldstream Mining [ASX:GDM] has taken a giant leap in the advancement of its Mibango platinum project in Tanzania. The Aussie-based junior today (21 August) announced that it had struck a joint venture agreement with the world's third largest platinum group metals (PGMs) producer, London-listed Lonmin plc [LSE:LON], after more than half a dozen mining houses including Anglo Platinum and Impala Platinum had shown an interest in the Mibango discovery. Lonmin has displayed an appetite for seeking out new PGM opportunities as its South African operations mature. Last year it became the 11.8 per cent major shareholder in Aussie PGMs and gold explorer Helix Resources [ASX:HLX] by taking up a share placement for A$7.8 million. Lonmin was currently earning 50 per cent in the Munni Munni project in Western Australia and had already invested an additional A$7.5 million, on exploration, and was in the process of spending another couple of million. The company has also formed JVs in Canada.
Now Lonmin intends to bankroll an exploration program at Mibango, which is said to be one of the few recent greenfields PGMs discoveries in the world. It has the right to earn a 60 per cent stake in the project within a five-year period by sole funding exploration and evaluation work to the feasibility study completion stage.
The beauty of the deal for Goldstream is that should the partners proceed with development, the junior would be able to ride on the coat-tails of Lonmin, which has agreed to arrange financing for commercial development. Aside from the advantage of Lonmin's high credit rating providing access to cheaper capital for Goldstream, Goldstream's repayment liabilities would be deducted from production revenue. Lonmin would pick up a further 5 per cent stake in the project by arranging the financing, giving it a total of 65 per cent. "This is beneficial to Lonmin because it doesn't have to wait around for a junior to raise equity capital," Goldstream's exploration manager Rob Edwards told Miningweb, referring to the possible difficulty Goldstream might have had in attracting project financing for an offshore project on a standalone basis without incurring a big premium. "It is also really beneficial to Goldstream as we don't have to pay out anything and it is non-dilutionary."
In addition, as part of its project entry, Lonmin would also reimburse to Goldstream its previous exploration expenditure totalling US$610,000.
According to Goldstream, Mibango has the potential to host a world-class PGMs deposit with similar characteristics to the rich Merensky and UG2 reefs in South Africa's Bushveld Complex, where Lonmin sources its entire annual PGMs production of about 1.35 million ounces from a 27km section of the reefs.
Goldstream managing director, George Kenway, said several major companies had been looking at Mibango. "We concluded that Lonmin was the right partner given (its) experience in operating in Africa and well-established credentials as a low-cost chromitite specialist PGMs miner," he said.
Under the terms of the JV, Goldstream would continue to operate the exploration phase and Lonmin would take over management of the project "at the point where (its) expertise can best be applied – in advanced project evaluation, metallurgy, development and mining, refining and marketing," Kenway said. He added that Lonmin's financial strength meant there would be no delays in funding requirements for the five-year period.
Diamond and aircore drilling programs at Mibango have commenced and would involve a minimum expenditure commitment by Lonmin of US$1 million. This round of drilling was scheduled to be completed by 31 March next year.
Mibango is located in western Tanzania, within the Kapalagulu layered mafic complex (intrusion). "This intrusion is approximately 35km long by 3km wide," Goldstream said. Its initial exploration on the property last year encountered substantial platinum mineralisation in weathered chromites exposed in trenches and also in shallow drill holes in the overlying laterite.
Goldstream's grassroots work focused on the mostly laterite covered southern portion of the intrusion. The current phase of drilling would also test: primary mineralisation below the oxidized chromitites in the central laterite covered section of the intrusion; a disseminated sulphide sheet 3-18m thick extending over 10km of strike in the northern outcropping part of the intrusion (interestingly, this northern area was drilled out by Inco in the 1950s in the search for nickel in massive sulphides, but not PGMs); and a further sulphide zone 8-12m thick located on the basal contact of the intrusion in the northern section.
Lonmin has a market capitalisation of about US$1.8 billion and is the only quoted PGMs company with its primary listing on the London Stock Exchange. It has a 73 per cent interest in the Western and Eastern Platinum operations, which include three mining units, a smelter complex and two refineries.
Goldstream holds an enviable land position in Tanzania of around 7,000sq.km which it acquired two years ago. The large ground package takes in the 1,600sq.km Mibango project area as well as, outside the scope of the Lonmin JV, other PGMs and nickel-copper sulphide prospects. "This is a very big mineral occurrence and we have all the prospective rocks under title," Kenway said earlier this year.
The company announced the discovery of Mibango in August last year.
Following a series of economic reforms the Tanzanian Government introduced over the past decade, the favourable fiscal and regulatory environment for mineral exploration and mining has culminated in four gold operations being developed in that time. Global gold giants AngloGold and Barrick Gold Corp are active in the country, with their Geita and Bulyanhulu mines respectively, as well as East African Gold Mines, which recently started gold production at its North Mara mine.
"The present government is an active promoter and strong supporter of investment in Tanzania's mineral sector," Edwards said.
Goldstream's African connection doesn't end there. In April, it entered into an exploration JV agreement with Anglo American covering 7,000sq.km of tenements in the Gawler Craton of South Australia. Three of the exploration licences abut the border of BHP-Billiton/Minotaur Resources JV project area, which contains the exciting Prominent Hill base metals discovery.
Under the terms of the Gawler agreement, Anglo can earn a 65 per cent interest in the tenements by sole funding exploration to completion of a pre-feasibility study. Anglo was expected to spend a minimum of A$500,000 in the first year of the JV.
Anglo American is Goldstream's major shareholder as well (with a 6.2 per cent holding). Goldstream shares were unchanged at A$0.
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