Australian company, Black Mountain Resources Limited is to spend much of the month of May trying to convince its shareholders to participate in a US $3.2 million (about Shs11.8 billion) rights issue, the substantial amount of which is planned to be invested in the Busumbu phosphate project in eastern Uganda, sources say.
The launch of the rights issue comes less than three months after Black Mountain Resources agreed to relinquish its license over the Namekara vermiculite mine for a debt relief.
According to some of the terms of the rights issue, US $1.7 million (about Shs6.3 billion) of the proceeds will be booked as exploration funding for the Busumbu project and other existing copper and rare earth targets identified in the Bukusu complex.
For the Busumbu project, Black Mountain Resources has planned to spend $500,000 (about Shs1.9 billion) for drilling; $200,000 (about Shs740 million) for preliminary mine planning and optimization studies; US $150,000 (Shs555 million) for broad sampling and metallurgical test work; and US$150,000 for preliminary processing plant optimization studies.
In a statement, Black Mountain Resources said: “Previous exploration on the Busumbu Phosphate Project Identified up to 3 kilometers of strike extent of phosphate mineralization likely between Busumbu and the Namekara Vermiculite Mine. The results also indicated a substantial phosphate mineralization footprint for future exploration.”
For the Bukusu project, the Australian mining company intends to spend US$ 150,000 for ground survey geophysics and sampling and US $250,000 (about Shs925 million) for drilling in some areas.
A recent baseline study estimated that there are about 50m tones of phosphate at Bukusu. Black Mountain says it is preparing an exploration programme for the Bukusu carbonatite complex, which hosts the Busumbu phosphate mine.
The company says it is engaged in “advanced negotiations with a strategic partner to progress the Busumbu phosphate project.”