Black Fire Minerals deals itself into rare earths sector with acquisition in Angola

Black Fire Minerals (ASX: BFE) has entered into an exclusive due diligence and option agreement with Sable Minerals Pty Ltd to acquire 70% of the Longonjo Rare Earth Project.

The 3,600 square kilometre project is located in centre of the increasingly stable Angola and is particularly enticing as it has had little modern exploration.

The prospect has a similar geology as a number of other rare earth (REE) mines and prospects around the world including Lynas Corp's (ASX: LYC) Mt Weld in Western Australia and Peak Resources' (ASX: PEK) Ngualla in Tanzania.

The project area is close to infrastructure including the regional city of Huambo and road networks as well as the recently recommissioned railway to the port city of Benguela.

Rare Earths prices continue to move higher on China's announcement on further reductions in rare earth export quotas in allocations for the first half of 2011.

Black Fire has negotiated an option to acquire 100% of Sable Minerals and thereby their interests in the Longonjo Project.

Under the terms of the agreement with Sable, Black Fire has been granted a 100 day exclusive due diligence period in return for a cash payment of US$175,000 directly to the Angolan Ministry of Mines on behalf of Sable to cover project licence fees.

At the completion of due diligence Black Fire may then exercise it’s right to acquire an 18 month option to purchase by making to Sable a cash payment of A$100,000 whilst agreeing to pay on behalf of Sable, ongoing licence fees and Government performance bonds during 2011 totalling US$268,000.

Upon payment of these licence fees Black Fire will be granted a non-dilutable 25% shareholding in Sable.

At any time before the end of the 18 month option period, Black Fire may acquire the remaining 75% shareholding in Sable by paying A$1,750,000 in Black Fire ordinary shares to be issued in two tranches, subject to obtaining relevant Black Fire shareholder approvals.

Tranche 1 will comprise A$1,250,000 worth of Black Fire shares to be issued at the VWAP for the 20 day period prior to the announcement by the company of its election to enter into the option agreement after due diligence.

Tranche 2 will comprise A$500,000 worth of Black Fire shares to be issued at the VWAP for the 20 day period prior to the announcement by the company of its election to exercise its option to acquire the remaining 75% equity in Sable.

Limited prospecting conducted to date has lead to the discovery of the Longonjo REE Prospect which comprises a large rare earth element (REE), thorium, niobium + phosphate soil geochemical anomaly which peaks at 1.68% lanthanum (La), 3.04% cerium (Ce) and 0.3% niobium.

The soil anomaly at 0.5% Ce is >2km x 1.5km in dimension and is currently open to the southeast.

Assays for four rock chip samples taken within the Longonjo soil anomaly have returned results of 2-4% combined rare earth oxides (REO).

In addition to the Longonjo, copper-gold-uranium-iron mineralisation and historical mine workings have been discovered at the Cassenha Hill Prospect. Best rock chip assay results to date include 9% copper and 6g/t gold.

Black Fire will commence an aggressive systematic exploration program with early stage drilling at Longonjo, including planned trenching and pitting, on completion of due diligence.

Simon Rigby, executive director, said “the REE target will be the focus of initial on-ground work including a program of pitting and trenching to obtain bedrock geochemical information before drill testing commences."

"The project is considered to have excellent exploration potential within the 3,600km2 license area for a number of commodities including copper, gold and manganese and this additional project upside will be assessed in parallel with the REE exploration programs. The company has an experienced in-country team available to immediately commence these exploration and evaluation programs."