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Minco to sell stake in Pallas Green zinc project to JV partner Xstrata for US$19.4 mln cash
2011-07-13 07:40:00
Minco PLC (LON:MIO) is selling its 23.6 percent stake in the Pallas Green zinc project in the Republic of Ireland to its joint venture partner Xstrata (LON:XTA) for US$19.4 million in cash.The partners have been unable to come to an agreement regarding the 2011 drilling programme and budget proposed by operator Xstrata Zinc, particularly to the allocation between infill and exploration drilling. These discussions about the work programme eventually evolved into a proposal by Xstrata to purchase Minco's JV interest – which Minco accepted.The conditional agreement announced today still requires Mindo shareholder approval at an EGM, to be called in due course, and regulatory consents.Xstrata has provided Minco with a revised JORC compliant resource estimate as of December 31 2010 and dated February 18 2011. At a 4 percent zinc equivalent cut of, the resource amounts to 25.9 million tonnes in the inferred category at an average grade of 7.51 percent Zn and 1.38 percent lead while the 6 percent zinc equivalent cut off resource amounts to 17.6 million tonnes inferred at an average grade of 8.96 percent Zn and 1.72 percent Pb.Xstrata had in 2010 indicated a potential start-up date of 2017 for a mine at Pallas Green, with an indicative capital cost of US$300 million and with an indicated annual production of 160,000 tonnes of zinc. For the year 2011, Xstrata proposed a €13 million, US$18 million, budget comprising additional exploration and infill drilling as well as a pre-feasibility study.The pre-feasibility study and related costs is budgeted at about €3 million, while the proposed €10 million drilling program is split about two thirds infill definition drilling and one third exploration drilling. Twenty one drill rigs are currently operating on the Pallas Green property, all within the Caherconlish area. In the first six months of 2011, to the end of June, 139 holes were drilled or are in progress for a total of 47,000 metres.As previously announced, Minco has not agreed to this proposed 2011 programme and budget and particularly to the allocation between infill and exploration drilling. Minco believes that the lead/zinc deposits at Pallas Green have not yet been fully delineated and has proposed that the drilling in 2011 should focus on ongoing exploration in the prospective Caherconlish area, and particularly exploring for higher grade and larger tonnage parts of the overall deposit. Minco believes that these higher grade zones are likely to be geologically associated with the southern boundary fault structure, which has not yet been identified and confirmed, which and Minco believes should lie 500 to 800 meters to the south of the current Tobermalug and Knockroe drilling. Xstrata has not agreed with Minco's proposals and, as part of the prefeasibility study, wants to concentrate on infill drilling of the already defined Tob
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