Firering sings option to acquire chunk of Zambia's Limeco

(Sharecast News) - Firering Strategic Minerals confirmed the signing of an option deed on Thursday, which would allow it to acquire a substantial stake in Limeco Resources for $5.1m, divided over two tranches. The AIM-traded firm said the agreement pertained to Limeco's limestone project, situated 22 kilometres west of Lusaka in Zambia.

It said the option deed, also involving Clearglass Investments, provided Firering with the choice to acquire up to 28.33% of Limeco, while Clearglass could procure 5%.0

Limeco's project incorporates a limestone quarry, with a non-JORC compliant mineral resource projected to be over 73 million tonnes.

Moreover, the project features a quicklime production facility that could manufacture between 500 and 600 tonnes of quicklime daily.

Firering said more than $100m had been invested in Limeco's lime plant in Zambia, which was currently in its final stages of commissioning.

The infrastructure included a limestone quarry with an estimated resource of 73.7 million tonnes at 95.3% calcium carbonate, a two-stage crushing circuit, eight kilns, a limestone stockpile of 200,000 tonnes, and amenities including main access roads, power, and water.

Talks were in progress regarding lime offtake with major copper producers.

The company said Clearglass had agreed to a non-refundable fee of $0.5m for the grant of the option.

In the first tranche, Firering said it would pay $2.5m to obtain 17.5% of Limeco's shares, and Clearglass would get 2.5%.

In the subsequent tranche, Firering would dispense $2.6m for an additional 10.83% stake in Limeco, and Clearglass would get another 2.5%.

The firm said Limeco was poised to be profitable within the next 12 to 24 months, and was aiming to begin dividend distributions to its shareholders soon after that.

With anticipated positive cash flows, Firering said it was considering debt financing avenues to secure its share in Limeco.

A shareholders' agreement had been finalised between Firering, Clearglass, and the current Limeco shareholders.

Under the agreement, Firering said it had secured the right to appoint either the chief executive or chief financial officer of Limeco, ensuring its influence over the initial commissioning and kickstarting of production through the lime plant.

"Firering has been keen to add a production asset to its portfolio," said chief executive officer Yuval Cohen.

"We believe this is a unique opportunity for Firering to diversify its investments and secure a stake in an advanced project which is commission ready with the potential to be in production within a year.

"In 2021, Glencore sold its Mopane copper mine in Zambia to ZCCM Investments for $1.5bn, resulting in Limeco being surplus to its requirements."

Cohen said Limeco had been at an effective standstill while the sale of the Mopane copper mine was being negotiated.

"Firering has wasted no time in establishing a technical team responsible for the refurbishment of the crushing system.

"Commissioning and modifications to the plant consisting of eight kilns will gradually be brought online and is estimated to produce between 500 and 600 tonnes per day of quicklime.

"Initial cash flow is expected within 12 to 24 months, which will increase after the plant has reached steady state production."

Should both options be exercised, Yuval Cohen said the 28.33% stake in Limeco was expected to generate cash flow for Firering.

At 1545 BST, shares in Firering Strategic Minerals were up 2.1% at 7.3p.

Reporting by Josh White for Sharecast.com.