Changara Background
The Changara project comprises four exploration licences covering an area of 525km² located approximately 100km southwest of the Provincial capital of Tete and flanking Zimbabwe’s north-eastern border. The national power grid passes within 15km of the project’s eastern boundary.
The licences are underlain by lower Proterozic rocks of the Rushinga Group which flank the north-eastern margin of the Zimbabwe Craton. Although the area has experienced limited historical exploration, 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.
During Q4 2008, Baobab completed an extensive soil geochemistry survey covering an area of 380km² within three of the Changara exploration licences (representing approximately 70% of the total project area). Interpretation of the results identified a series of multi-element (lead, zinc, manganese, ±copper) targets coincident with prospective geological settings. Follow-up assessment of the highest ranked targets is currently underway.
Ferrex Plc Joint Venture Agreement
Ferrex Plc is an AIM listed company building a portfolio of manganese and iron assets in southern Africa. In pursuit of this objective, Ferrex approached Baobab’s wholly owned Mozambique subsidiary, Capitol Resources Limitada, with the objective of entering into an unincorporated Joint Venture relationship for the purpose of undertaking exploration activities at the Changara Project and, subject to exploration success, developing mining operations. Ferrex has been nominated as the operator of the Joint Venture, reporting to a management committee represented by both Parties.
A legally binding Heads of Agreement outlines a four stage investment to earn an increasing participatory interest in the Project:
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Stage 1 - Ferrex commits to funding a First Work Programme at a cost of not less than US$300,000 over a period of not more than 12 months. Ferrex's participatory interest in the Project upon the completion of Stage 1 will be 0%.
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Stage 2 - Subject to having completed the First Work Programme satisfactorily, Ferrex shall have the exclusive right to undertake and fund a Second Work Programme at a cost of US$1.2m over a period of not more than 18 months. Ferrex's participatory interest in the Project upon the completion of Stage 2 will be 50%.
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Stage 3 - Subject to having completed the Second Work Programme satisfactorily, and subject to exploration success, Ferrex shall have the exclusive right to undertake and fund a Pre-Feasibility Study over a period of not less than 12 months. Against Ferrex having completed the Pre-Feasibility Study, its participatory interest in the Project shall increase to 65%.
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Stage 4 - Upon completion of the Pre-Feasibility Study, Ferrex will have the option (under the mutual agreement of both Parties) to increase their participatory interest to 80% by undertaking and funding a Definitive Feasibility Study over a period of not less than 18 months.
