Energizer Resources Inc. (TSX: EGZ) (OTCBB: ENZR) (FWB: YE5) (“Energizer” or the “Company”)
is pleased to announce that it has entered into a binding Heads Of Agreement (“HOA”) for an industrial minerals exploration and development joint venture with Australian company Malagasy Minerals Limited (“Malagasy”) (ASX:MGY).
Under the HOA, a new joint venture company (“JV Co”) will be formed and owned 75% by Energizer and 25% by Malagasy. The JV Co will have the right to explore for a defined group of industrial minerals (listed in full below) and in particular vanadium, within specifically defined permits on the newly expanded land position. The new land position covers an area comprising of 2,119 claims and totals 827.7 square kilometers, which is about 3.5 times the size of the Green Giant property.
Malagasy has a large and highly prospective land portfolio in Madagascar, much of which is adjacent to the south and east of Energizer’s Green Giant property. While delineating Energizer’s current NI 43-101 compliant vanadium resource, the geological data strongly indicated that the main vanadium trend continued immediately beyond the southern boundary (Jaky Zone) of its Green Giant vanadium deposit. Malagasy has already confirmed, through exploration results, extensive zones of vanadium mineralization on its tenements located immediately south and adjacent to Energizer’s land position.
With the confidence the Company has in the metallurgical optimization process currently being conducted as part of its Preliminary Economic (PEA) Study, Energizer capitalized on this strategic opportunity to significantly expand its current vanadium resource, thus securing its potential market-leading position in vanadium.
The new joint venture represents a ‘win-win’ proposition for both companies, as it is expected to expand the vanadium resource and accelerate the search for other strategic and industrial minerals in Madagascar.
Kirk McKinnon, Chairman and CEO, commented, “With the very significant Malagasy land position, we have now secured a new source of vanadium along with the high potential of discovering other strategic minerals. With Malagasy as a partner, who has a well-established tenure in Madagascar, Energizer is well-positioned to build on its exploration success.”
Joint-Venture Agreement Details
For the purposes of obtaining the right to explore for and subsequently conducting all required exploration and development activities for Industrial Minerals, the JV Co will enter into sub-leasing arrangements with Malagasy and its Madagascar subsidiaries. Malagasy will retain title to its tenement permits until Energizer or the JV Co has notified Malagasy of its intention to proceed with a mining operation. Upon such notification, Energizer and Malagasy have agreed to use every commercial effort to complete all the requirements to obtain the relevant mining permit(s) to allow the JV Co to undertake mining operations in the defined area.
The HOA provides Malagasy with a free carried interest in the joint venture until the delivery by the JV Co of a Bankable Feasibility Study (“BFS”). Upon the delivery of a BFS on any discovery, Malagasy will then be required to contribute to ongoing development and mining operations in accordance with the agreement and its 25% interest in the joint venture.
The HOA contains a standard dilution clause for non-participation whereby a party’s interest will convert to a 2% net smelter return royalty should their participating interest fall below 10%.
Energizer will manage all operations undertaken by the JV Co.
Terms of Agreement
The HOA is subject to Energizer being satisfied with the outcome of its due diligence enquiries in relation to Malagasy and its Madagascan subsidiaries that hold the permits. Under the terms of the HOA, Malagasy will receive:
The HOA – and any transactions contemplated by the HOA – remain subject to Energizer and Malagasy obtaining any and all applicable regulatory approvals, including those of the TSX.
Throughout the duration of the HOA, Malagasy will retain access to its properties to carry out any exploration and development it chooses for all other minerals including base metals, precious metals, platinum-group elements, excluding only the vanadium and industrial minerals specified in the list below.
List of Industrial Minerals
The following constitutes the industrial minerals as defined in the Agreement with Malagasy:
Vanadium, Lithium, Aggregates, Alunite, Barite, Bentonite, Vermiculite, Carbonatites, Corundum, Dimensional stone (excluding labradorite), Feldspar (excluding labradorite), Fluorspar, Granite, Graphite, Gypsum, Kaolin, Kyanite, Limestone / Dolomite, Marble, Mica, Olivine, Perlite, Phosphate, Potash –Potassium minerals, Pumice Quartz, Staurolite, Zeolites
About Energizer Resources
Energizer Resources Inc. is a mineral exploration and development company based in Toronto, Canada, which is developing its 100%-owned Green Giant Vanadium Project located in Madagascar. The Green Giant vanadium deposit is one of the largest known vanadium deposits in the world. In addition to the Toronto Stock Exchange (TSX: EGZ), the Company’s common shares trade on the U.S. Over-The-Counter Bulletin Board under the symbol, ENZR, and on the Frankfurt Exchange under the symbol, YE5.
For more information, please visit our website at www.energizerresources.com, or contact:
Brent Nykoliation, Vice President of Business Development
Toll Free: 800.818.5442 or 416.364.4911Email: email@example.com
or Kirk McKinnon, Chairman and CEO