Baobab Resources to farm out Changara project in Mozambique

Baobab Resources (LON:BAO) has agreed a new joint venture with Southern Iron - an unlisted Australia-based southern Africa-focused mineral explorer - to advance  Baobab’s Changara base metal and manganese project, in Mozambique. Through the staged joint venture agreement, Southern Iron can earn up to 80% in the project by undertaking a Definitive Feasibility Study within five years.
                            
"The signing of the agreement with Southern Iron has established a firm foundation from which we will be able to rapidly assess and develop the Changara project. We look forward to working with the Southern Iron team in exploring this exciting corner of Mozambique," Baobab MD Ben James commented.

Through the first two stages, Southern Iron can earn 50% in the project with investments totalling US$1.5m. In Stage 1, Southern Iron is committed to fund a US$300,000 ‘First Work Programme’, which will last for up to 12 months. The new partner will not earn any equity in the project through Stage 1. Subsequently, Southern Iron can fund the ‘Second Work Programme’, at a cost of US$1.2m over an 18 month period. At the end of Stage 2, Changara will be a 50:50% joint venture.

Subject to satisfactory results from the first two stages, Southern Iron can increase its interest in the project to 65% by funding a Pre-Feasibility Study (PFS). And with the mutual agreement of both parties, Southern Iron can take its stake in Changara to 80%, by funding a Definitive Feasibility Study.
Southern Iron will act as the operator of the Changara JV, and Baobab will undertake and supervise the initial phase of exploration, utilising the company’s “extensive exploration experience and logistical support in-country”.

At Changara, field activities are due to commence in September 2010.

The Changara is a highly prospective base metal and manganese project, where Baobab’s previous work identified numerous Broken Hill Type targets. The project comprises of four exploration licences, over 525km², flanking Zimbabwe's north-eastern border.

In reference to the properties geology, Baobab said that: “The licences are underlain by lower Proterozic rocks of the Rushinga Group ... it is considered highly prospective for SedEx / Broken Hill Type polymetallic base and precious metal and manganese mineralisation and hosts numerous occurrences of zinc, lead, manganese, iron ore, fluorite, copper and silver”.

An extensive soil geochemistry survey, covering 380km² (approx 70% of total project area), in Q4-2008, identified a series of multi-element - lead, zinc, manganese, copper - targets coincident with prospective geological settings.

London-based stockbroker, Astaire Securities said the joint venture agreement will allow the acceleration of exploration at the Changara. “The Joint Venture secures funding to explore and develop the prospect to the feasibility study stage faster and without competing for resources with Baobab’s other projects”.

Currently, Baobab is primarly focused on the Tete iron-vanadium-titanium project. Last week, the company reported continuing exploration success on the flagship project, with the first round of scout drilling on Tete’s Chimbala prospect intersecting significant widths of magnetite-ilmenite mineralisation with the grades reaching 63.1% Fe (iron) and 0.72% vanadium.

The Tete project, covering an area of 632 square kilometres, is located immediately north of the provincial capital of Tete and shares licence boundaries with Vale and Riversdale's mega coal projects. The project contains two areas of magnetite-ilmenite mineralisation: the Singore area to the south; and the Massamba Group trend in the north.

The 8 kilometre long Massamba Group trend is composed of a series of five prospects - Chitongue Grande, Pequeno, Caangua, Chimbala and South Zone - that have experienced little or no historical exploration.

The current reverse circulation and diamond drilling programme will ultimately cover 12,000m to assess the Chimbala and South zone prospects of the Massamba Group trend, aiming to improve confidence in the 400 to 700 Mt (million tonne) exploration target and clarify geological domains for continued metallurgical testwork.

Then a 7,000m RC drilling programme, designed to step out from the scout drilling at South Zone, is scheduled to commence during August 2010.

Baobab is targeting the completion of a pre-feasibility study at Tete by mid-2011 and a bankable feasibility study by early 2013.