Galileo Resources PLC (LON:GLR) has announced it is to exercise its option to acquire the Star Zinc project in Zambia through a joint venture to be established with BMR Group PLC (LON:BMR), and has raised around £1mln via a placing to fund the move and other projects.
In a statement today, the AIM-listed firm said it has entered into a binding agreement with BMR to conditionally advance the firm US$591,600 - at an interest rate of 12% per annum - which is intended to be used for the purpose of completing the exercise of the option.
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Galileo plans to subscribe for a 51% equity stake in the joint venture through a newly created special purpose vehicle, to be named Enviro Mining Limited, which will be financed by the cancellation of that loan.
In late afternoon trading, Gallielo shares held steady at 2.38p, while BMR shares jumped over 30%, or 1.00p higher to 4.25p.
Colin Bird, Galileo’s chairman and CEO said: "This joint venture with BMR on the Star Zinc property gives us a position in the very promising Star Zinc resource close to Lusaka, Zambia.
“The availability of primary Zinc deposits is diminishing and Star Zinc is open ended in both directions and depth with the strong possibility of other similar occurrences within the concession boundaries.
“Our first step will be to confirm the current non JORC resource, followed by trenching and sampling of other areas and thereafter drilling."
Beaufort Securities raises over £1mln via placing
Galileo also announces that the company's broker, Beaufort Securities, today completed a placing of 54,672,500 new ordinary shares at a price of 2.0p each to raise £1,093,450 before expenses.
The group said, in addition to its acquisition of interest in the Star Zinc project, it intends to use the proceeds of the placing and a director's subscription to fund, amongst other things, follow-up exploration and drilling on its US gold property in Nevada, and advancing the company's Glenover Phosphate project in South Africa.
Full-year losses narrow
The expansion plans came after Galileo reported full-year results in a separate statement earlier today which saw its loss narrow as the disposal of its US gold asset was offset by a foreign exchange boost.
The AIM-listed miner sold the Gabbs gold-copper property in Nevada for US$2.5mln cash in August 2016 for which it booked a £469,259 loss.
Galileo reported a total comprehensive loss for the year ended March 31 2017 of £16,675, narrower than the £784,499 loss posted a year earlier thanks to a foreign exchange gain of £1.4mln, versus a £364,872 currency loss the previous year.
The firm’s headline loss for the year was £1.4mln after the Gabbs disposal, compared to a £419,627 loss a year earlier, with operating expenses rising to £871,776 compared to £435,862 the year before.
Looking ahead, Galileo simply noted that drilling at the Concordia project has been completed and the results are under review.
In June, a major phosphate producer confirmed its desire to undertake a two-phase pilot plant phosphate flotation Galileo’s 34%-owned Glenover project in South Africa.
In his statement, Galileo’s chairman Colin Bird concluded “we remain committed in our quest to identify a large resource, which will be transformational for the Company and its shareholders.”