Enters into agreement to Acquire 100% in SAN

RNS Number : 7931T

URU Metals Limited

25 November 2013

 



25 November, 2013

URU Metals Limited

("URU" or "the Company")

Agreement to acquire 100% Interest in the South African Nickel Projects

The Directors' of URU Metals Limited, (AIM:URU), the  base metals and uranium explorer and development Company, are pleased to announce that they have entered into an agreement with its Joint Venture partner, Southern African Nickel Limited ("SAN"), to acquire 100% interest in SAN.  As a result of this purchase, URU now owns 100% interest in the Southern African Nickel Joint Venture ("SAN JV").  The SAN JV holds 74% interest in the Zebediela Nickel Project and 50% interest in the Burgersfort Nickel Project.  URU will pay the shareholders of SAN US$1 and will pay the JVs current outstanding obligations of approximately US$185,000 to its operating consultant, Pangea Exploration, a non-arms length company to SAN.

Highlights

·    URU has increased its interest in the Zebediela Nickel Project from 37% to 74% and in the Burgersfort Project from 25% to 50%.

·    Minimal consideration for a quality project

·    Nearer to a resolution to arbitration as it re-establishes discussions with Umnex Mineral Holdings Limited, our BEE partner

Umnex Mineral Holdings Limited ("Umnex"), the South African BEE partner on the Zebediela Project holds the remaining 26% of the Zebediela Nickel Project through its interest in the SAN-Umnex Joint Venture.  SAN and Umnex are currently in the middle of an arbitration process regarding the Zebediela Nickel Project over issues within the San-Umnex Joint Venture. Through this purchase, URU inherits SAN's interest in the arbitration process.

Commenting on the deal, URU Metals' CEO Roger Lemaitre said:

"For an attractive price we were able to reach an agreement with our SAN JV partner which we believe will increase shareholder value in the near future. The agreement increases URU's stake in the Zebediela Nickel project from 37% to 74% and brings us a step closer to resolving the ongoing arbitration as we continue our discussions with Umnex Mineral Holdings Limited, our BEE partner in South Africa.  The Zebediela Nickel project is a world class nickel project with combined inferred and indicated resources of over 1.5 billion tonnes and remain optimistic that a resolution to arbitration can be reached."

Contact details:

URU Metals Limited Roger Lemaitre, CEO	+ 1 416 892 2870
WH Ireland Limited (Nominated Adviser and Broker) Adrian Hadden James Bavister	+ 44 207 220 1666
Ribeiro Communications Ana Ribeiro	[phone]

Additional information regarding the SAN Nickel JV Projects can be found on the Company's website at www.urumetals.com.

Notes to Editors

Background information on SAN JV Nickel Projects

The Zebediela Nickel Project is located in the Limpopo Province of South Africa close to the platinum mining town of Mokopane, very close to existing rail, highway, and electrical power infrastructure.

The Zebediela Nickel Project is a large disseminated sulphide resource with mining engineering aspects similar to porphyry copper deposits in terms of size and grade.  The NI 43-101-compliant PEA led by the MSA Group outlined indicated resources of 485.4 million tonnes averaging 0.245% nickel, and additional inferred resources of 1,115.1 million tonnes of 0.248% nickel.  The Zebediela Project also contains significant iron minerals in the form of magnetite that is also being investigated as a potential by-product.

The PEA considered the mining and milling of only 500 million tonnes of mineralized material in an open pit mine approximately 1700 m long by 880 m wide by 250 m deep.  The proposed mining rate is 20 million tonnes per annum using a contractor mining fleet.  The strip ratio was calculated to be 0.36:1.

Extensive work was conducted on the Zebediela deposit metallurgy indicating that 50% of the total contained nickel could be recovered into a high quality saleable nickel concentrate averaging 16% Ni.  Start-up capital expenditures including contingencies and working capital are estimated to be $650 million and sustaining capital is estimated at $58 million over the life of the mine.  Operating expenditures are estimated to be $3.35 per pound of recoverable nickel.

The PEA projects a pre-tax and pre-royalty net present value of $1,018 million, an internal rate of return of 25.7% and a 3.8 year payback period at an 8% discount rate using a nickel price of $8.50/lb and a ZAR/USD ratio of 8.1.  Annual cash flow is project to be $203 million.

URU is aware of the potential value of a magnetite as an iron concentrate by-product at Zebediela since the inception of the project.  Metallurgical work investigating by-product magnetite was included in the scope of the PEA investigations, but due to analytical delays, any potential economic impact from iron by-product was not included in the report.

 

END

 

 

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