Minbos Resources Ltd. said March 29 that it secured an option to acquire a 90% stake in Tana Minerals Ltd. unit MRE Mining (Mauritius) Ltd., which holds two rare earths exploration permits in Madagascar covering 440 square kilometers.
Under the terms, Minbos will pay A$10,000 for the exclusivity and will commit to spending A$250,000 on drilling and pay A$25,000 to extend the exclusivity following drilling until completion of the deal.
The transaction is conditional upon Minbos obtaining all the required approvals, finishing due diligence on the project and the renewal of the exploration permits.
Considering this, the company said completion may take up to 12 months, and as part of its due diligence, it will try to determine the likely timing and conditions that may be attached to the renewal of the exploration permits.
Minbos will issue 250 million shares upon renewal of the permits and a further 250 million shares upon defining a JORC-compliant resource containing a minimum 200,000 tonnes of total rare earth oxides, or TREO, with a grade of at least 3% TREO.
The remaining 10% stake in the permits will be free carried to a definitive feasibility study, at which point Tana will have to contribute or sell its stake to Minbos at mutually agreed valuation.
According to the release, 28 rock chip samples on the Ankazohambo prospect in 2010 returned TREO grades of between 0.14% and 40.8% with a median grade of 3.95%.