Aim-listed Firering Strategic Minerals has signed an option deed to acquire up to 28.33% of Limeco Resources, the owner of a limestone project located 22 km west of Lusaka, Zambia, for an aggregate of $5.1-million across two tranches.

The project, formerly owned by Glencore, comprises of a limestone quarry with an estimated non-Joint Ore Reserves Committee- (Jorc-) compliant mineral resource of more than 73-million tonnes and a quicklime production facility with the potential to produce between 500 t/d and 600 t/d of quicklime.

Quicklime has multiple uses and is an essential reagent widely used during flotation of copper sulphide minerals, the company points out.

Limeco was initially established by Glencore to tackle the shortage of quicklime in Zambia and to supply its Mopane operations. In total $100-million has been invested in establishing the limestone quarry and the current lime plant.

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

“Limeco has been at an effective standstill while the sale of Mopane copper was being negotiated,” commented Firering CEO Yuval Cohen.

He said Firering had established a technical team to refurbish 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 t/d and 600 t/d of quicklime. Initial cash flow is expected within 12 to 24 months, which will increase after the plant has reached steady state production,” said Cohen.

Firering will have the option to acquire up to 28.33% of Limeco across two tranches for an aggregate amount of $5.1-million.

Co-option holder Clearglass will pay a non-refundable $500 000 fee for the grant of the option, in exchange for up to 5% of Limeco upon exercise of the option by Firering, with such amount to be made available to Limeco as a loan from the vendors to bring the project into operation.

On completion of the first tranche of the option, which is exercisable by Firering at any time over the next 12 months, Firering will pay $2.5-million to the vendors and receive 17.5% of Limeco’s shares, with Clearglass receiving 2.5%.

On completion of the second tranche of the option, which is exercisable at any time in the 12 months following exercise of the first tranche of the option, Firering will pay $2.6-million and will receive a further 10.83% of Limeco’s shares, with Clearglass receiving a further 2.5%.

Limeco is expected to be profitable and deliver cash flow within 12 to 24 months with the view of paying dividends to shareholders as soon as possible.

Given the expected positive cash flow, Firering will be assessing debt financing options to acquire its stake in Limeco.

A shareholders’ agreement entered into between Firering, Clearglass and the vendors gives Firering the right to appoint either the CEO or CFO of Limeco with effect from the grant of the option, for the company to oversee and manage the initial commissioning and starting of production through the established lime plant at the project throughout the period of the option.

Firering intends to commission a Jorc-compliant report when operations have been fully commissioned.