Thursday, 22 March 2012

Montero Mining hires advisor for potential sale of phosphate assets

Montero Mining and Exploration (CVE:MON) said Thursday that it has hired an advisor to assist in the sale process of its phosphate assets, namely the Duyker Eiland, Phillips Kraal and Lamberts Bay projects, in South Africa.
The company hired AltaCorp Capital to help in the process, which the company has launched in an effort to focus on its flagship Wigu Hill rare earth project in Tanzania.
“The potential sale of the phosphate assets will allow the company to focus on our flagship Wigu Hill Rare Earth Project in Tanzania as we de-risk the project to demonstrate potential rare earth production in the near term," said president and CEO, Dr. Tony Harwood.

"All proceeds from the proposed sale of the phosphate assets will be used to advance our rare earth strategy. We are confident that AltaCorp have the necessary experience and contacts to potentially realize a transaction.”

A preliminary economic assessment was recently completed for the Duyker Eiland project.

The PEA report, conducted by Turgis Consulting, is based on an initial inferred mineral resource of 32.8 million tonnes, grading 7.15% P2O5, and shows average production of 490,000 tonnes per year of 33% P2O5 concentrate over an 11-year mine life.

The company said that an average of 4.5 million tonnes of rock would be mined per year at low stripping ratios of 0.57:1. As reported late last year, preliminary metallurgical test work has also indicated that an acid-grade phosphate concentrate of 33%to 35% P2O5 can be produced by flotation.

Montero has agreed to pay AltaCorp a percentage of the transaction value if such a transaction is completed by AltaCorp. Transactions can include the sale of one or more assets, a merger, or one more more joint venture deals.

"Montero does not intend to make further announcements or disclose developments with respect to the transaction unless the evaluation has been completed and the Board has approved a definitive transaction and the company has entered into a definitive agreement," it said in a statement.
Earlier this week, Montero said  it inked a non-binding agreement with Star Earth Minerals for the supply of light rare earths from its Wigu Hill rare earth element project in Tanzania - a move that significantly de-risks the property.

Star Earth Minerals is a manufacturer of light rare earth compounds based in Mumbai, India, and is seeking a consistent supply of light rare earths for its customers in the glass, ceramic and catalyst industries, located mainly in South East Asia and Japan.

The Wigu Hill property was first identified in the 1950s as a high grade deposit, with a large carbonatite complex measuring 6.4 by 3.2 kilometres.  The asset has bastnaesite mineralization and is considered a "look-a-like" to Molycorp's (NYSE:MCP) Mountain Pass project. The rare earth elements at the deposit are hosted in the mineral bastnaesite found in carbonatite dikes, making it similar to Molycorp's Mountain Pass deposit in the USA.

Rare earth elements are critical in the development of emerging green technologies and high-tech applications, from electric and hybrid vehicles and wind and hydro power turbines, to LCD screens, MRI, X-ray machines, mobile devices and other computing equipment.

Montero is working to update the initial NI 43-101 compliant resource estimate for its Wigu Hill project this quarter, and is targeting cash flow from a small mining operation at the Twiga Zone.

Last September, the company released a 3.3 million tonne inferred resource on only a fraction of the Wigu Hill complex. Only the Tembo and Twiga deposits on the eastern side were estimated to contain an inferred resource of 3.3 million tonnes at a grade of 2.6% light rare earth oxide (LREO5).

Results from the in-fill drilling completed at the Twiga Zone will be used to update the existing NI 43-101 resource estimate, which is expected during the second quarter.

Under the terms of the memorandum of understanding with Star Earth, within three months of entering into the agreement, Star and Montero will sign an off-take agreement for 1,000 to 3,000 tonnes per year of mixed rare earth and cerium, subject to price and product specifications.
Montero said the non-binding deal will remain in effect for 12 months, and either party can terminate the agreement at any time.

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