22 Oct 2010 12:00
Alecto Energy plc / EPIC: ALO / Market: AIM / Sector: General Financial
22 October 2010
Alecto Energy plc ('Alecto' or 'the Company')
Award of Mauritania base metal (copper/gold) licences
Following its announcement on 16 September 2010, Alecto Energy plc, the AIM listed resource investment company, is pleased to announce that its wholly owned subsidiary, Alecto Holdings Limited, has secured three mineral development licences in the Mauritanide mobile belt of Mauritania.
Highlights
·; Granted three gold and base metal development licences in the Mauritanide mobile belt of Mauritania, totalling 1,902 sq km
·; Applications pending on two uranium licences, totalling 1,592 sq km
·; Prospective exploration targets, including Iron Oxide/Copper/Gold ('IOCG') indications, identified by SRK Exploration Services in multiple locations in each of the licences
·; O'Connor International Limited to be engaged as consultants issued shares for consultancy services in Mauritania to assist the Company in developing the licences
Alecto Executive Director Damian Conboy said, "These gold and base metal licences in Mauritania offer the Company exposure to a highly prospective mineral district. The preliminary work carried out by SRK Exploration Services on the areas has confirmed the resource potential and our aim is to implement an extensive exploration and evaluation programme to identify and advance the most prospective projects on the licences.
"We are excited about Mauritania, where there has been an appreciable increase in activity in resource development. With a land package of the size we have been granted, coupled with the on-ground experience gained through our consultancy arrangement with O'Connor International Limited, I believe we are well placed to capitalise on our position and progress our development strategy to the next phase."
The Mauritanian Ministry of Industry and Mines has granted Alecto Holdings Limited licences for three gold and base metal sites totalling 1,902 sq km (the 'Licences'). The Licences have been acquired as part of the Company's investing strategy of securing exploration interests in the natural resource and energy sectors. Applications are currently pending on two uranium licences totalling 1,592 sq km (the 'Applications').
The Board of Alecto has identified Mauritania as a potential location for under developed resource opportunities and, although Mauritania has a significant amount of mining activity, predominantly major iron-ore and gold projects, the Board consider that much of the country is under-explored.
The country has already yielded some significant mining projects including Red Back Mining Inc's Tasiast Gold Mine and this resource stands at 6.5 Moz (but remains open along strike). Production at the Guelb Moghrein deposit owned by First Quantum Minerals has also resumed with both copper and gold being targeted. First Quantum has recognised this deposit, which is open at depth, to be part of the IOCG group of deposits typified by the Australian deposits of the Cloncurry and Gawler district such as the world class Olympic Dam deposit.
The three gold and base metal licences have been granted in Chegar (758 sq km), Wad Armour (615 sq km) and Zreibya (529 sq km) in Mauritania. These were identified by the Board following extensive fieldwork and analysis of historic data conducted by the Company's consulting partner, O'Connor International Ltd ('O'Connor'), in conjunction with SRK Exploration Services ('SRK ES'). Prospective exploration targets, including gold and base metal indications, were viewed in a number of locations at each of the sites covered by these three licences.
The Company views the Zreibya and Wad Amoour licences as having the most potential and intends to undertake airborne geophysics, detailed geological mapping, ground geophysics and regional sampling on both areas. However, poor exposure at the Chegar licence complicates exploration and detailed geological mapping and regional sampling of the entire licence site is also required.
The Applications are in respect of two uranium sites, Mreiti (888 sq km) and Wad Mourkba (704 sq km), which straddle an internal WSW-ESE contact within the Achaean shield and close to its edge with the younger rocks of the Taoudenu Sedimentary Basin. The blocks are new acquisitions and a geographic information system was used to ascertain their exact location. Geochemical sampling results seen by SRK ES highlighted the existence of uranium values.
The Licences were acquired for a total cash consideration of €48,000. In order to facilitate the application for the Exploration Licences in Mauritania, the Company signed a consultancy agreement (the 'Agreement') with O'Connor. The Agreement constitutes a substantial transaction with the meaning of Aim Rule 12. Under the Agreement, O'Connor will provide consulting services to the Company including, but not limited to, technical assistance in Mauritania, from O'Connor's in-country advisers, assistance with the application and planning process, liaising with the Mauritanian Ministry of Industry and Mines and other government bodies, assistance with in-country logistics and any other services required related to the acquisition and development of the Licences. John O'Connor, the principle of O'Connor International Limited, has many years' experience in the natural resource arena in Mauritania and other developing economies and was the founder and Chairman of Bluefinger Ltd.
Under the terms of the Agreement the Consultant will be paid, in respect of the three gold and base metal exploration licences, €210,000 per licence to be settled by a cash payment of €80,000 and the balance by the issue of 5,777,778 new ordinary shares of 0.7p in the Company (the 'Gold Shares'). Additionally, on completion of a positive bankable feasibility study, Alecto will pay a further €130,000 per licence, to be settled by the issue of 5,777,778 new Ordinary Shares. Following the commencement of production at the sites covered by the gold and base metal licences, Alecto will pay O'Connor a cash royalty on revenue from gold sales based on the total ounces of gold sold equal to US$1 for every US$250 of the sale price per ounce.
In respect of the Applications, subject to these licences being granted, Alecto will pay €50,000 per licence to be settled by the issue of 2,222,222 new Ordinary Shares ('Uranium Shares'). A further €50,000 will be paid on completion of a positive bankable feasibility study with a positive conclusion and will be settled by the issue of 2,222,222 new Ordinary Shares ('Stage 2 Shares'). Following the commencement of production at the sites covered by the uranium licences, Alecto will pay O'Connor a cash royalty on revenue from uranium sales based on the total pounds of uranium sold equal to US$0.40 for every pound sold will be paid to the Consultant. The fee for the Applications was €32,000 and was paid to the Mauritanian Ministry of Industry and Mines.
When issued, the Gold Shares will represent 14.51% of the Company's enlarged issued share capital and, in the event that the Uranium Shares are also issued, O'Connor will hold 17.58% of the Company's enlarged issued share capital. O'Connor has agreed to enter into a lock-in agreement in respect of the Gold Shares and the Uranium Shares for a period of 6 months following their issue.
**ENDS**
For further information, please visit www.alectoenergy.com or contact:
| Damian Conboy | Alecto Energy plc | Tel: 020 3006 0260 |
| Greg Kuenzel | Alecto Energy plc | Tel: 020 3006 0260 |
| Nick Naylor | Allenby Capital Ltd | Tel: 020 3328 5656 |
| Alex Price | Allenby Capital Ltd | Tel: 020 3328 5656 |
| Hugo de Salis | St Brides Media & Finance Ltd | Tel: 020 7236 1177 |
| Elisabeth Cowell | St Brides Media & Finance Ltd | Tel: 020 7236 1177 |