News - Blina Minerals acquires stake in Mongolian licence to explore for gold copper

Blina Minerals (ASX: BDI) has signed a binding term sheet with Mongolian company BSI to explore a prospective gold copper property in Mongolia.

The company can acquire an interest in the licence area through a joint venture company which in turn would own the licence and the license area. Currently, BSI is the sole holder of the license.

The terms of the deal include Blina paying BSI US$270,000 upfront, which will give Blina access to the area to conduct a legal and technical due diligence.

Blina also has committed to spend US$0.5 million on exploration in 2011 while conducting the legal and technical due diligence.

On 23 December 2011, following the outcome of the legal and technical due diligence, Blina has the option to progress the arrangement by paying BSI US$400,000 to secure a 51% share in the license area.

BSI may elect up to half of this payment to be made by way of Blina shares at $0.35 per share (up to a maximum of about 5.7 million shares).

On acquiring the 51% interest, Blina has the right over the next three years, commencing on 24 December 2011, to spend a total of US$2.5 million to further explore the property.

This spend will allow Blina to increase its stake in the ownership of the licence area according to the following arrangement:

- Year 1 – Spend US$750,000 to own 61%;
- Year 2 – Spend US$750,000 to own 71%; and
- Year 3 – Spend US$1,000,000 to take the ownership stake in the licence area to 85%.

BSI will be free carried by Blina to the completion of expenditure and Pre-Feasibility Study.

As part of the deal a management committee will be established consisting of two representatives from Blina and one from BSI and will oversee the progress of the exploration project.

Once Blina has earned an interest of 85% in the license area, the parties will jointly fund a Bankable Feasibility Study or be diluted according to an agreed formula.

In all cases BSI will retain the right to a 2.25% Net Smelter Revenue (NSR) as defined by the AMPLA Model Framework Minerals Royalty Deed.

BSI will receive US$150,000 per annum for three years for administrative and legal matters relating to the project.

The licence area covers 21,091 hectares and is located in the Bayankhongor region of Mongolia that is 500 kilometres southwest of Ulaanbaatar.

The property is prospective as the surface expression of the copper mineralised linear stock work veining may indicate the existence of a deeper porphyry system.

In 2008, BSI carried out detailed exploration at one of the property’s prospects covering 34 square kilometres using detailed geological mapping and prospecting, geophysical and geochemical survey, petrographic and mineralogical techniques.

Prospected by Russian geologists in the 1940s, the property contained old Chinese workings.