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| ||December 03, 2008|
Nanika Resources' lucky ship comes in
| ||The Lucky Ship might be a molybdenum mine, but Nanika Resources is sitting on a pile of gold thanks to a group of Korean investors.|
The company announced Thursday that they were entering into a memorandum of understanding (MOU) with Palm Clean Energy Inc. and Daewon Chemical Co. Ltd. of South Korea, confirming intentions to form a joint venture company.
The new joint venture company will hold continued exploration, development and mining rights to the Lucky Ship molybdenum project located at the Nanika Ridge site, approximately 85 kilometres southwest of Houston.
Drilling has shown that the property sits on 92 million tonnes of molybdenum with a grade of 0.3 or higher.
After the announcement Nanika stock doubled to six cents a share with 65 million shares outstanding.
At the same time last year, Nanika's stock price sat at $0.28, but dipped as low as two cents on Wednesday, the day before the announcement.
"In the current economic times, with the price of commodities, this is great news for Canada, B.C. and the Bulkley Valley," Doug Kerr, communications officer for Nanika, said. "The Korean investors are more interested in the end product for molybdenum, so its current price is not a problem for them."
The price for molybdenum prices has crashed from a high of $35 per pound at the end of October and has recently leveled out at $12 per pound (USD).
Upon completion of the Nanika Molybdenum Joint Venture Agreement (JVA), the Korean partners will be issued 40 per cent of the new joint venture company shares and Nanika will hold 60 per cent.
The total payment by the Korean partners will then be $5 million. Pursuant to the signing and completion of the JVA, the first payment will be $500,000.
Nanika has spent about $7.5 million in the Bulkley Valley in the last two years on suppliers, drilling and truck rentals for the project.
"The project is a very important one," Nanika President James Jacuta said. "Hopefully within the next month to 60 days we hope to begin work."
Following the subsequent completion by the
Korean partners of the junior financing needed for all reasonably estimated exploration costs to provide the information necessary to produce a bankable feasibility study in accordance with National Instrument 43-101 the Korean partners will be entitled to an option to 51 per cent of the shares of the joint venture company and Nanika will hold 49 per cent. This financing is to be completed within 24 months of signing of the JVA.
Under the terms of the MOU the Korean partners within 30 months of completion of the bankable feasibility study, will arrange the senior financing required to put the property into continuous production. Upon arranging the senior financing the Korean partners will be entitled to an option to 60 per cent of the shares of the joint venture company and Nanika will hold 40 per cent. In the event that the Korean partners are not able to arrange the senior financing within the 30 months then Nanika would be at liberty to do so. Upon Nanika arranging the senior financing then the Korean partners would hold 42 per cent of the shares in the joint venture company and Nanika would hold 58 per cent.
Jacuta said Nanika will begin working on the environmental assessment process and negotiations with First Nations as soon as possible.
"For the people who have concerns about the environmental aspects, I would like to say that the company is very committed," he said. "We will hold ourselves to the highest possible standards with environmental studies and any negotiations we have with First Nations.I would like to thank the teams representing all of the parties for their efforts. They were certainly complicated by recent events around global fiscal uncertainty. The success achieved in arriving at this Memorandum of Understanding is the result of their persistence, commitment, and understanding in all of the circumstances."
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