GALILEO Resources has offloaded its Star Zinc project in Kabwe to Siege Mining Ltd, a local Zambian mining company.
According to details, Galileo in March last year, agreed to sell the project to a local Zambian mining company for US$750,000, in a deal that could allow it to benefit from future royalty payments.
The Zambian company will pay US$200,000 for the large-scale exploration licence and US$550,000 for taking control of the project and Galileo’s exploration data.
Galileo could be paid a royalty based on future sales of zinc from the project in return for this data.
Any royalty on future sales of zinc from the project will be based on the zinc grade. The minimum royalty rate is 3 percent and this increases by 1 percent for each US$250 increase in the zinc price above US$2,500 per tonne up to a maximum of 10 percent.
Following a review, Galileo said it concluded that the project – located close to an expanding urban area near Lusaka – is best
operated by a local mining company.
It added that Siege is in the process of being granted the necessary licences to allow them to conduct mining activities within the Star zinc project area. Siege intends to start mining imminently, producing between 6,000 and 15,000 tonnes a month of saleable ore, although initial output may be lower.
Following the sale, Galileo said it will focus on the Kalahari exploration where the immediate focus will be exploration activities in Botswana where it has 15 licences in the Kalahari Copper Belt.
Galileo will also the Kashitu zinc project also in Zambia which has similar characteristics to the Star Zinc project but is considered being larger and the company plans an exploration program for 2021 with the primary objective of developing a resource for the supply to a nearby refinery and/or the raw ore export market.