West Leederville-based Whinnen Resources Ltd has entered into a conditional agreement to acquire an 85% interest in Fongo Tongo Bauxite Project in Republic of Cameroon, West Africa.
West Leederville-based Whinnen Resources Ltd has entered into a conditional agreement to acquire an 85% interest in Fongo Tongo Bauxite Project in Republic of Cameroon, West Africa.
The total consideration is US$8m, made up of US$4m cash and US$4m in shares with 50% of the consideration subject to confirming a proven resource.
The announcement is pasted below:
Whinnen Resources Ltd (Whinnen) is pleased to announce that it has entered into a conditional agreement to acquire 85% of the Fongo Tongo Bauxite Project in the Republic of Cameroon in Africa, for a total consideration of US$8 million.
Payment will comprise US$4 million cash and US$4 million in shares, and will be subject to satisfaction of milestones as outlined below.
The Fongo Tongo project is located 14kms northwest of the major town of Dschang in western Cameroon and is a high-grade bauxite deposit relative to other deposits around the world.
The project covers an area of 916km2 which is very well drained allowing year-round mining and exploration operations.
It exists as a series of hilltops on a laterised plateau at between 1500 to 1800 metres above sea level.
The area was first explored in 1956 by the Cameroonian Department of Mines and Geology and again by Alcan in the 1970s and 1980s. All exploration was done by hand and there has been no modern exploration of the project (i.e. never been drilled).
Alcan completed a feasibility study in 1980, which was based on an initial mining target of 1Mt per year of washed bauxite, and a hydro-electric powered alumina refinery producing 400,000t of alumina per year capable of expanding to 1,200,000t of alumina per year.
Alcan wrote that the bauxite reserves were calculated at 34.0 Mt at 47.0% Av.Al2O3, and 2.47% R.SiO2 at Fongo Tongo only.
The Company believes that these historical results may be equal to the JORC term Inferred Resources, but not reserves.
These numbers are in a category varying from indicated (IND) to potential (POT). The low category of the bauxite reserves is emphasized, which means a major exploration program will be required to prove the reserves.
Under the agreement, Whinnen will acquire 85% of Yekani Mining Company (Cameroon) S.A (Yekani) which holds 100% of the Fongo Tongo Bauxite Project.
The remaining ownership of Yekani will consist of 15% held by Cameroonian interests. Exploration Licence (Permit de Recherché) number 028 was granted to Yekani in March 2006.
If a mineable resource is outlined, Whinnen plans to convert the tenement to a mining or exploitation permit, in which the Cameroon Government will have up to a 10% shareholding in Yekani.
There is scope to increase the tonnage of bauxite, as other occurrences at nearby locations have not been followed up.
Other bauxite occurrences are located within the permit area; among these, those at Djeu, Melang, Bamboutos, Fomdjoumetah and Bamboutos North have been subject to reconnaissance pitting.
Recent sampling by Whinnen indicated grades of up to 54% Al2O3 at surface.
Bauxite is easy to surface drill when compared to other commodities as it is near surface and of a soft nature. Bauxite is classed as a bulk mining commodity such as iron ore and coal.
A feasibility report written by Alcan in 1980 was based on an initial mining target of 1,000,000 tonnes per year of washed bauxite and a hydro-electric powered alumina refinery producing 400,000t of alumina per year capable of expanding to 1,200,000t of alumina per year.
Whinnen initially plans to sell bauxite from the Fongo Tongo Project to alumina refineries.
There is growing demand from alumina refineries in China, Russia, and the Middle East.
China is a potential new market for bauxite and the average import price for bauxite to China has risen over 40 per cent over the past year, and imports have risen to 8Mt a quarter.
With the cooperation of the Cameroonian Government, Whinnen hopes to establish an alumina refinery in Cameroon in the medium term, using carbon friendly hydroelectric power.
Compared with other African countries Cameroon enjoys relative political and social stability, which has permitted the development of agriculture, roads, railways, and large petroleum and timber industries.
A new and modern mining code which promotes investment in exploration and mining was drafted and published in 2001, and came into force in 2004.
