Alexander Mining has announced what it describes as a major development towards the establishment of an AmmLeach zinc oxide processing plant with the signing of an option agreement with an as yet unnamed mid-tier mining company.  Under the agreement, the entity has been granted an exclusive three months’ option period to complete due diligence on the AmmLeach zinc processing technology.

Under the terms of the agreement, Alexander has granted the entity an exclusivity period of three months, expiring December 15, 2014, in order to complete the due diligence. Furthermore, the entity has paid Alexander a non-refundable option cash payment of $360,000. The exclusivity period may be extended for up to three further months by further non-refundable payments to Alexander of $120,000/mth.

If, upon successful completion of due diligence, the entity chooses to exercise the option, the agreement envisages the mining company subscribing for 60 million new ordinary shares in Alexander Mining at a price of 3 p per share, providing the company with £1,800,000 in cash. Of this, £900,000 will be applied to a work programme, including the development and pilot plant testing of the AmmLeach technology, to be agreed between Alexander and the mining group.  The remainder of the funding will be used by Alexander for working capital purposes; while the mid-tier miner would be granted an effectively exclusive licence for the use of AmmLeach technology for zinc production in a jurisdiction agreed by the parties. The miner will also be entitled to appoint up to two non-executive directors to the board of Alexander;

The licence terms also comprise the payment to Alexander of a 2% gross sales revenue royalty on all metal production by the miner using the AmmLeach technology. In the event that the entity terminates the agreement within four weeks of its signing, Alexander will grant to the entity 3,000,000 new ordinary shares in the capital of the company.

Martin Rosser, CEO, said: “The option agreement signed with a highly regarded mid-tier mining group represents a major development towards the potential establishment of an AmmLeach zinc oxide processing plant.  The option holder is a multi-commodity mining company with exploration, development and operational experience.    We look forward to working closely together during the option period.”