Galileo Resources has begun offtake agreement negotiations with Jubilee Metals Group regarding its majority owned Star zinc project in Zambia.
In March, Jubilee acquired Glencore’s (LSE:GLEN,OTC Pink:GLCNF) Sable zinc refinery for US$12 million; it is set to be part of the company’s Kabwe zinc-vanadium–lead project in Zambia. While the project is still in progress, Jubilee claims that the refinery’s acquisition cut down first metal delivery by 18 months, with the expectation of it being seen within a year.
As Jubilee begins setting the stage for Kabwe’s eventual production, the company is now in a position to start exploring offtake agreements for the asset.
“Jubilee’s acquisition of the Sable refinery and development plans necessitates fast tracking negotiations for an off-take agreement to supply Star Zinc ore. We will undertake all necessary work, related to expedite producing a JORC compliant maiden resource estimate and a mining plan for ore from Star Zinc,” Galileo CEO Colin Bird said in a statement.
Galileo completed a GBP 500,000 placement in late April, giving the company funding to complete an ore resource estimate, preliminary pit design and a small-scale mining permit application for Star.
However, an independently modeled exploration target released last November gave the asset an estimate of 600,000 to 900,000 tonnes with an average zinc grade of 10 to 12 percent.
Alongside the work at Star, the company is also exploring the Kashitu zinc prospect, located 6 kilometers from the Sable refinery. The company believes Kashitu has similar mineralization to Star, noting that vanadium has been historically identified at the prospect.
According to Galileo, Kashitu’s license area is more extensive than Star’s and holds the potential to host “much larger tonnage” than the latter based on historical exploration.
“The Kashitu prospect has the potential to be a bigger resource than Star Zinc, and we intend to commence a study for exploration on this prospect as soon as practicable,” Bird added.
Galileo’s share price closed 8.91 percent lower on Thursday (May 2), ending the day of trading on the LSE at GBX 0.46. Jubilee also closed in the red on Thursday, dropping 2.72 percent to GBX 3.04 on the LSE.
As of Wednesday (May 1), zinc was trading at US$2,905 per tonne on the London Metal Exchange.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.