PROACTIVE INVESTORS AUSTRALIA
KASBAH RESOURCES
Full Kasbah Resources profile here
Kasbah Resources (ASX: KAS) is an advanced explorer and developer purely focussed on tin. Kasbah’s main focus has been to progress the Achmmach Tin Project in Morocco, having established a robust underground JORC resource.
Recent drilling results indicate that Achmmach is rapidly transforming into a asset with considerable potential for a substantial underground mine to be developed. Kasbah has built a presence in Morocco with strong relationships with Morocco’s Mines Department and the local Moroccan community.
Monday, March 12, 2012 by Angela Kean
Asia’s premier tin trading house and one of the largest companies in the world, Toyota Tsusho Corporation’s interest has been piqued by Kasbah Resources’ wholly owned Achmmach Project. The entry of the company into the project further de-risks its development.
Kasbah Resources (ASX: KAS) has signed a memorandum of understanding with Toyota Group company, Toyota Tsusho Corporation, for an option to acquire up to a 20% interest in its Achmmach Tin Project in Morocco.
Kasbah managing director Wayne Bramwell said this is a strategic move for both parties.
“The joint venture is consistent with Kasbah’s corporate strategy as it substantially de-risks development of our Achmmach Tin Project. For Toyota Tsusho it provides an entry into a new, long term source of tin concentrates,” he said. “The additional funding provides further scope for Kasbah to accelerate our development works and expand our exploration programs at Achmmach. “Toyota Tsusho’s expertise can be utilised to maximise our concentrate marketing strategy, whilst their relationship with Japan Oil, Gas and Metals National Corporation (JOGMEC) may provide another project financing option for Achmmach.”Toyota Tsusho trades around 8% of the global tin market and more than 50% of all tin consumed in Japan. The Toyota Motor Corporation is the largest shareholder (22%) alongside Toyota Industries Corporation (11.1%) and a group of major Japanese banks.To earn its 20% interest in one of the largest undeveloped tin deposits in the world, Toyota Tsusho must make a series of payments to Kasbah, which will be used for exploration and development works at Achmmach, as well as finalise a joint venture agreement.Toyota Tsusho must pay Kasbah A$1 million on signing the MoU, which is non-refundable, $4 million within 45 days of signing the MoU, $11 million within 60 days of completion of the Pre-Feasibility Study, and a final payment to be calculated from the net present value of the Definitive Feasibility Study and paid within 90 days of completion of the study.
The final payment and signing of a joint venture agreement will secure Toyota Tsusho’s 20% interest and entitle the company, on mutually agreeable commercial terms, to a minimum 20% offtake of tin produced from these two exploitation permits.
Kasbah will manage and operate the joint venture.If the option payments are made by Toyota Tsusho, Kasbah will provide security over shares in Kasbah Gold SARLAU, which holds the Achmmach permits, to Toyota Tsusho.Importantly, this security can be enforced in the event that Kasbah has not completed the Pre-Feasibility Study by 31 December 2012 or the Definitive Feasibility Study by 31 December 2013.
Exit Option If Toyota Tsusho does not complete the payments or finalise the joint venture agreement in the specified timeframes, or if the company decides not to proceed with the acquisition of its 20% interest, Kasbah may activate an Exit Option removing Toyota Tsusho from the project. Under the Exit Option, Kasbah can either issue Toyota Tsusho shares to a value equal to 50% of Toyota Tsusho’s payments (using a 14 day volume weighted average price calculation) or alternatively remit cash equal to 50% of the payments received.Greater Benefit Bramwell said, on a higher level, Toyota Tsusho’s global reach could potentially catalyse other new tin opportunities for Kasbah.“The execution of this agreement significantly raises the commercial profile of the Achmmach Tin Project to the global tin market and creates significant value for all Kasbah shareholders,” he said.
Achmmach Gains Momentum
Kasbah is closing in on an upgrade to the 7 million tonnes at 0.8% for 54,000 tonnes contained tin Resource.Infill drilling on Section 2050 continues to confirm and extend the Meknes Inferred Resources up and down dip. Highlight intersections from recent drilling comprise 9 metres at 0.63% tin from 373 metres, including 3 metres at 1.15% from 377 metres; 8 metres at 0.96% from 268 metres; 14 metres at 0.42% from 310 metres; and 5 metres at 1.03% from 332 metres.Five drill rigs are in operation at Achmmach across a 1 kilometre strike length.Kasbah is targeting an upgrade to the Resource by the March quarter of 2012.The interesting thing to note is that Kasbah has been on upwards share trajectory since mid to late December last year when shares were trading at around A$0.14. This is largely due to the ongoing success of Achmmach, which contains one of the largest undeveloped tin deposits in the world and has the potential to transform Kasbah into a significantly larger and higher valued “tin play” than currently is the case. Kasbah has earned a price target of $0.43, well above its current share price of $0.275, issued by broker Hartleys. Growing PortfolioMeanwhile, the company has completed the acquisition of the Bou El Jaj Tin Prospect in Morocco, located just 8 kilometres south-southwest of the Achmmach Project.Rock chip samples have returned up to 17.9% tin. Bou El Jaj is considered to be highly prospective, with an outcrop defined within ground that is similar in nature to the geology at Achmmach.Importantly, the prospect is located at the southernmost extension of a mineralised corridor that is about 2.5 to 3 kilometres wide and almost 12 kilometres long, extending south-southwest from Achmmach through to Oued Beht.
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