Altona Rare Earths plc announced it had signed an option deed to acquire a 70% legal and beneficial interest in Leadway Group Ltd, owner of the Nankoma rare earths project in Uganda.
The project is in exploration licence EL00115, covering an area of 67.5 km2 and is located some 50km east of Jinja, which lies 130km east of Kampala in Eastern Uganda.
The project is close to Australian miner Ionic Rare Earth Ltd’s rare earths exploration project which has a similar geology and geomorphology.
IonicRE has reported, from its Makuutu Project, an estimated total resource of 315 million tonnes at 650 ppm total rare earth oxide (TREO).
The Australian miner also reported high levels of critical rare earth oxides (CREO) at 310 ppm, including neodymium and praseodymium, two of the rare earth elements which Altona aims to extract.
“Considering that IonicRE’s resource is of the ionic-clay adsorption type deposit, the TREO and CREO figures are highly encouraging, due to the ease of recovery and low-cost nature of this type of deposit,” said Altona in a statement.
“This has provided to the board of Altona with sufficient confidence to invest in the Nankoma tenement.”
PROCESS
Altona added it had started a three-month period of legal and financial due diligence on the Ugandan-registered Leadway Group, ahead of exercising its first option right to acquire an initial 51% interest by 30 June 2021.
The miner will also perform a small-scale scout exploration programme, including core analysis of the samples at the site.
Under the option rights, Altona pays a fee of £25,000 to the shareholders of Leadway Group and issue 250,000 ordinary shares in the Altona to the shareholders of Leadway Group.
Altona will then conduct three months of technical due diligence.
This will be followed by successful further exploration and the agreement of a 12-month work programme and exploration budget for Nankoma by the two companies.
Altona will exercise its second option right to acquire an additional 20% interest to give the company a total 71% interest in Leadway Group by 30 September 2021.
The cost of exercising the second option right will be £125,000 of Altona ordinary shares.
If Altona decides against exercising the second option right it has the obligation and right to re-transfer the first option shares back to Leadway Group’s shareholders to ensure it has no further obligation or liability with respect to Leadway Group.