Katoro Gold buys Tanzania nickel project through Kibo Nickel acquisition

Tanzania-focussed exploration and development company Katoro Gold has entered into a conditional agreement to acquire Kibo Nickel and its wholly-owned subsidiary, Eagle Exploration, from its majority shareholder Kibo Mining, it announced on Friday.

The AIM-traded firm said Kibo Nickel is the 100% owner of the polymetallic Haneti Nickel Project in Tanzania.

Additionally, Katoro announced that it had raised £0.33m via a placing of 25 million new ordinary shares at a price of 1.30p each.

It said the conditional acquisition of 100% of the Kibo Nickel Group was for £0.2m, payable through the issue of 15,384,615 new ordinary shares to Kibo at the placing price, together with a 2% royalty payable on any sales revenue - less transportation and refining costs - in respect to nickel or nickel concentrates.

It completed the placing to raise £0.33m before expenses from new and existing shareholders, saying it was to further develop its existing gold projects in Tanzania, develop Haneti and for general working capital purposes.

Kibo, Katoro’s majority shareholder, was investing £0.08m in the placing, and following receipt of the net proceeds of the placing, Katoro said it would have cash resources of approximately £0.71m.

The acquisition was said to be part of Katoro's commodity diversification strategy.

It said the Kibo Nickel Group controlled 100% of Haneti, which covered an area of around 5,000 square kilometres and formed a “near contiguous” project block, with approximately $1.5m spent on exploration to date by the seller.

Previous values, internally estimated by Kibo, included 13.59% nickel, 0.25% cobalt, 78 parts per billion (ppb) gold, 413 ppb platinum, 1930 ppb palladium and 927 parts per million copper, as well “interesting” lithium anomalies.

Independent work, undertaken by Western Geophysics, underlined potential for “substantial” nickel sulphide deposit, Katoro claimed, explaining that the acquisition reflected current “strong” market fundamentals, with demand for nickel expected to grow exponentially, driven by electric vehicle sales.

Haneti was set to be advanced in tandem with Katoro's Imweru Project, subject to the outcome of ongoing consultation with the Tanzanian government on the latter, as the company had previously announced.

“Haneti is a highly prospective high-grade nickel sulphide asset and is a great addition to Katoro's portfolio,” said executive chairman Louis Coetzee.

“Historic work has already yielded exceptional high grades of up to 13.59% nickel as well as discoveries of gold, cobalt and platinum and some significant lithium anomalies.”

With independent work already outlining the potential for a significant nickel deposit, Coetzee said the firm was “excited” about initiating an exploration and development plan.

“This in tandem with the strong market fundamentals for nickel; annual demand from the EV sector is currently approximately 36,000 tonnes, and forecast to surge to 350,000-500,000 tonnes by 2025.

“[This] makes Haneti an exciting prospect which we hope will add significant value to the company.”