Luiri Gold (ASX: LGM) is able to immediately recommence full-scale exploration and development activities in Zambia after the company’s large scale mining licence LML 48 was reinstated by the government.
LML 48 contains the Matala and Dundrobin gold deposits in the Luiri Hill Deposit, and infill drilling in 2010 gave an indicated resource of 422,000 gold ounces.
Under the settlement agreement, the cancellation notice issued on June 15, 2010, has been extinguished by the Zambian government, and the company has discontinued its appeal against the decision against the Honourable Minister of Mines.
Luiri Gold has agreed to continue project development activities and to be in a position to begin construction of a mining project prior to December 31, 2013. This time frame allows for two complete dry season to progress and complete field exploration.
While the cancellation of the licence has delayed Luiri’s operations, the company has kept things moving as much as possible, continuing to employ 29 full time workers and taking on additional personnel on short-term contracts to progress exploration trenching in preparation for a new drilling program.
Now that the licence is renewed, a proposed work program comprising exploration and project evaluation study work is in development.
Exploration drilling will be conducted with the objective of increasing the resource base and identifying a quantity of high-grade ore that is easily mineable by open pit methods to support fast track development of mining and production.
The main drilling program will be undertaken between May and November 2012, with follow up and infill drilling to be conducted in 2013. Coffey Mining has been engaged to calculate a new JORC resource assessment, expected to be announced by the end of 2011.
Luiri Gold will also progress study work to develop plans for mining and processing, evaluate cost and revenue estimates and produce a project implementation plan and development schedule.
This work will support a definitive technical and financial evaluation that will be used as the basis for project financing.
In the September quarter, Luiri began a search to acquire mineral projects outside Zambia to provide alternative exploration and development activities. The company has not yet said whether it intends to continue the search, or focus solely on Luiri.
Community engagement
In a further condition of the agreement, the company will fund a community development trust, comprising US$150,000 and shares in Luiri of equivalent value to 5% of the market value of the project based on an independent valuation at the date of issue.
It will also facilitate and fund a community development committee comprising no more than 12 members from the Shakumbila Chiefdom, to monitor and administer the funding of social development projects and activities within the development area.
Board movements
To reflect the company’s renewed exploration activities, director Melissa Sturgess is moving into the role of non-executive chairman, while director Evan Kirby has been appointed CEO and managing director. Kirby will also act as chairman of Luiri’s Zambian operating company, Luiri Gold Mines.
Clinton White has been appointed CEO, country manager and general manager for Luiri Gold Mines.