Premier African Minerals Limited (LON:PREM) has opted not to exercise its option to up its stake in Democratic Republic of Congo-focused Casa Mining Limited.
Private company CASA has three mining licences, covering 133 square kilometres, known as the Misisi project in the highly prospective South Kivu province in the eastern Congo gold belt of the Democratic Republic of Congo (DRC).
Premier acquired a 4.5% interest in the company on 18 October, and has the option to increase it by 18 December to 30%, but has decided not to do so.
To fund the initial stake purchase, Premier raised £300,000 by issuing shares at 0.32p each; the company’s shares have since drifted to 0.30p.
"Our current market capitalisation does not reflect the value of the underlying assets and accordingly we will not proceed with a direct financing to pursue the interest available in Casa,” said George Roach, chief executive officer of Premier.
“We remain strongly supportive of Casa and believe the project has great value and would generate significant value for Premier shareholders. I am pleased that Premier and Casa have agreed to work cooperatively to attempt to find a solution to both the consolidation of the Casa interests and appropriate finance to fully develop the project," he added.
CASA has spent around US$30mln developing the licences over the last six years and the most advanced Akyanga deposit has an initial near surface inferred resource of 1.2 million ounces at 1.7 grams per tonne gold, which is open along strike and down dip.
A scoping study at the project confirmed the potential viability of an 80,000 ounce of gold per year heap leach operation, with a total cash operating cost of US$628 per ounce based on current resources.
CASA is seeking finance to begin a 5,000 metre exploration programme to validate what is a 3mln ounce potential target at Akyanga and issue an updated scoping study by the end of 2017.