Berekely Mineral Resources, the Zambia-focused minerals company, has seen its share price shoot up 8% this morning after announcing it has bought an option on stockpiles of copper tailings located in the Chingola area in the north of the country.
Tailings are the residue of mining activity which often become available for processing after a mine has closed.
The "above ground resource" estimate at the Chingola site is for 98.9 million tonnes of tailings containing 1,445,000 tonnes of copper metal, although these figures have not been verified and are not "JORC Compliant" which is the scientific standard by which deposits are usually judged.
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Neverthless, Berekley is clearly optimistic.
It has 90 days to assess the stockpiles, which can then be extended for a further 90 days. The cost of the option has been $275,000.
If the company likes what it finds it may then acquire 80% of the three available stockpiles. That would cost $6.5m in cash and would also see the Zambian state mining company (the vendors) pick up of some 257m BMR shares at a value of 6p per share.
BMR would also be obliged to build a processing plant at a cost of around $25m and guarantee royalties of $14m to the vendors.
The current copper price is $332 per pound.
Berekeley's Chairman, Masoud Alikhani said of the deal: "Zambia is already the world's third largest exporter of copper. Substantial long-term profits and cash-flow will accrue to us from the compelling economics of the resources BMR can acquire at Chingola."
At 8.51am in London BMR shares were up 7.37%. So far this year the stock has fallen 58% although over five years the group is ahead by 24%.
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