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Completion of Due Diligence Exercise on GoldQuest and its Lead-Zinc Exploration Projects in Spain
FERRUM CRESCENT LIMITED
(Incorporated and registered in Australia and registered as an external company in
the Republic of South Africa)
(Registration number A.C.N. 097 532 137)
(External company registration number 2011/116305/10)
Share code on the ASX: FCR
Share code on AIM: FCR
Share code on the JSE: FCR
Australian ISIN: AU000000WRL8
South African ISIN: AU000000FCR2
12 April 2016
Ferrum Crescent Limited
("Ferrum Crescent", the "Company" or the "Group")(ASX: FCR, AIM: FCR, JSE:
FCR)
Completion of Due Diligence Exercise on GoldQuest and its Lead-Zinc
Exploration Projects in Spain
Highlights:
- Due diligence field trips and desktop study completed in respect of the Toral
and Lago lead-zinc exploration projects in the provinces of Leon and Garcia,
Spain (the “Iberian Projects”), wholly owned by GoldQuest Iberica, S.L.
(“GoldQuest”)
- Geological assessment by the Company indicates major potential for re-
interpretation of historical data and delivery of a new geological model
identifying significant continuous zones of mineralisation
- Mineralogical data supports initial assessment of the mineralisation as being
metallurgically straight-forward
- Objective now to secure the requisite funding to enable exercise of the
Company’s exclusive option over GoldQuest and the pursuit of a low cost,
highly focused work programme to define the economic and geological
characteristics of the projects including the definition of JORC compliant
resource estimates
Ferrum Crescent, the ASX, AIM and JSE quoted metals project developer,
announces that, further to the Company’s announcement of 16 February 2016, its
newly re-structured project team has now completed the Company’s comprehensive
due diligence investigations on GoldQuest and the Iberian Projects.
GoldQuest owns 100 per cent. of licences covering 2,024ha in the Province of Leon
(the “Toral Project”) and 100 per cent. of licences in the Province of Galicia (the
“Lago Project”), all such licence areas being located in northern Spain and having
high prospectivity for both lead and zinc. The Company holds an exclusive option,
valid until 31 July 2016, to acquire 100 per cent. of GoldQuest’s issued share capital
(the “Option”), for an aggregate consideration of approximately £460,000, comprising
up to £320,000 in cash and the issue, credited as fully paid, of 100 million new
ordinary shares in the capital of the Company, having an aggregate value of
£140,000, based on the Company’s closing mid-market share price on 11 April 2016
of 0.14 pence per share.
Geological interpretation and review
The Toral Project area has historically been assessed as containing a single, tabular
zone of mineralisation at depths of 300-500m below surface. Such simplistic
historical modelling, however, excludes a large amount of normally critical data and,
following its due diligence enquiries, the Company believes that the historic NI 43-
101 resource estimate significantly under-estimates the mineral potential of the Toral
Project. The Company further believes that an initial low cost exploration programme
should be able to test the mineralisation in a series of parallel, sub-vertical structures
running from depth up to surface.
Utilising the existing data and applying an exploration process that takes into
account key structural controls and the characteristics of existing nearby mines will
be a key initial work programme priority. Ferrum Crescent’s objective, following the
anticipated exercise of its Option in due course, will be to establish a JORC
compliant resource estimate at both the Toral Project and the Lago Project as well
as re-examining the scale and continuity of mineralisation at the Toral Project.
Mineralogical assessment and future process design
Ferrum Crescent’s ultimate objective would be to establish a credible mineral
reserve in a cost effective manner for consideration by potential future acquirers or
development finance groups.
Following assessment of the geology, together with a desktop study of nearby
mining operations, the Company believes that the metallurgy at the Toral Project is
straightforward and uncomplicated. Furthermore, it is anticipated that any economic
ores defined at Toral will be capable of being processed using simple industry
standard techniques. Preliminary assessment also indicates that the environmental
aspects of the project pose no unusual challenges, whilst the main social impact will
be a desirable increase in employment opportunities for the region.
Future activities will be focused on challenging all assumptions and conducting
appropriate project development studies.
Licencing and political risks and routes to key markets
During March 2016, the licences in respect of the Toral Project and the Lago Project
were renewed by the Government of Leon for a period of twelve months further to
the fulfilment of a basic work programme at the two sites. The assets are located in a
region containing existing mines and are situated away from any significant
conurbations or sites of interest. Spain is increasingly supportive towards its mining
sector and host to a number of recent, new, mining developments. It has a first tier
infrastructure system for the transportation of potential future product to a major
international port in order to supply concentrate to export markets.
Following completion of its due diligence exercise, the Board believes that, subject to
raising the requisite funding to, inter alia, enable exercise of the Option, the
Company can thereafter implement a cost effective work programme to derive a new
interpretation of the Toral and Lago Projects. Both assets have extensive pre-
existing data which can be used to underpin meaningful additional exploration and
metallurgical campaigns to deliver JORC complaint resource estimates and an
updated accurate assessment of the mineralisation characteristics and their scale.
Justin Tooth, Executive Chairman of Ferrum Crescent, today commented:
“Following my recent due diligence field trip and coordination with our newly
restructured team in Spain focussed on the re-interpretation of the geology and
metallurgy aspects of the Iberian Projects, I believe that the Toral and Lago assets
both hold significant potential for the generation of shareholder value. Toral, in
particular, is interesting in terms of its scale and potential economics if we can
demonstrate that multiple sub-parallel zones and an entire higher level area of
mineralisation have been missed historically.
“Subject to the requisite funding being secured and the Option being exercised in
due course in accordance with the conditions, we will be seeking to implement a
rapid work programme on the Iberian Projects to generate meaningful additional data
for potential lead-zinc asset acquirers or development financiers. Toral and Lago
represent an opportunity to prove up significant projects with strong economics in a
politically stable environment with existing world-class infrastructure. Our focus is set
on driving value for our shareholders from well thought-out asset development
strategies.”
For further information on the Company, please visit www.ferrumcrescent.com or
contact:
Ferrum Crescent Limited
Justin Tooth, Executive Chairman
Australia enquiries:
Grant Button, Non-Executive Director
T: +61 8 9474 2995
Ferrum Crescent Limited
Laurence Read (UK representative)
T: +44 7557 672 432
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler
T: +44 20 7409 3494
Beaufort Securities Limited (Broker)
Jon Bellis/Elliot Hance
T: +44 20 7382 8300
South Africa enquiries:
Bravura Capital (Pty) Ltd (JSE Sponsor)
Doné Hattingh:
T (direct): +27 11 459 5037
Notes to Editors:
Further Information on GoldQuest and the Iberian Projects
GoldQuest is a private company incorporated in Spain which owns 100 per cent. of
both the Toral Project and the Lago Project in northern Spain, each having high
prospectivity for lead and zinc.
Principal Terms of Ferrum Crescent’s Option
- Option to potentially acquire 100 per cent. of GoldQuest. GoldQuest owns 100
per cent. of two lead-zinc exploration projects in the provinces of Leon and
Galicia, in historic Spanish mining areas.
- Up to £22,500 staged option fee, in part shares and part cash, being paid by
Ferrum Crescent in return for an exclusive option, valid until 31 July 2016. If
exercised, Ferrum Crescent, will be required to:
- pay up to approximately £320,000 in cash consideration (calculated as a fixed
amount of £250,000 plus a further cash payment comprising the lesser of 50
per cent. of GoldQuest’s current liabilities and £92,500, minus the above
mentioned option consideration); and
- issue, credited as fully paid, 100 million new ordinary shares in the capital of
Ferrum Crescent.
Toral Project
The Toral Project has been extensively explored historically by its previous owners
Portex Minerals Inc. and Lundin Mining S.L. and the 2,024ha of mineral rights contains
extensive high grade zinc mineralisation. Located in north-west Spain, approximately
400km north-west of Madrid, the project’s licence area hosts excellent road, rail and
power infrastructure and is situated in a known historic mining jurisdiction. The asset
also has a pre-existing NI 43-101 resource estimate reported by Micon International Co.
Limited on 30 April 2012.
Lago Project
The Lago Project is located approximately 54km to the north-east of the Toral
Project. Historical investigations completed by or on behalf of the Spanish mining
firm, Exploracion Minera International Espana S.A. (“EXMINESA”), between 1985
and 1990, indicated that mineralisation at the Lago Project may be similar to that
encountered at the Toral Project with vertical, lenticular bodies (probably more than
one) approximately 800m long by 300m wide.
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