UK-based Galileo Resources has signed an agreement to divest the Star zinc project to local Zambian firm Siege Mining.
As per the deal terms, Siege Mining will pay $200,000 for the large-scale exploration licence in addition to $550,000 for taking an ownership stake in the project.
The Zambian mining firm will also acquire Galileo’s exploration data in relation to the Star Zinc Project.
Galileo will also be paid a royalty by Siege Mining on potential zinc sales from the project, based on the zinc grade.
Galileo chairman and CEO Colin Bird said: “The Star Zinc project is a small but high-grade deposit situated in the expanding outskirts of Lusaka in Zambia in relative close proximity to housing, schooling and social amenities.
“The project lends itself to highly selective mining in a small area and as such is suitable for a small-scale community project involving artisanal mining operations and sorting of ore off-site.”
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Siege Mining is in the process of securing licences required to undertake mining activities within the Star zinc project area.
Galileo said that the divestment will allow it to focus on exploration activities in Botswana. The firm has 15 licences in the Kalahari Copper Belt.
The deal follows the completion of survey by Galileo, which found that the project is best operated by a local mining company.
Proceeds from the sale and potential future royalty payments will be used by Galileo for general group working capital purposes and for additional work on its projects.