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African Consolidated Resources agrees JV for Nkombwa Hill rare earth project

African Consolidated Resources (LON:AFCR) (ACR) said it signed a joint venture deal for its recently acquired Nkombwa Hill project with privately-held Rare Earth International (NYSEMKT:REI) and reported the start of an in-house work programme.

The Nkombwa Hill project is located in northeastern Zambia, within ACR's 720km2 ‘Large Scale Prospecting Licence’, which was granted on 16 January 2010.

REI is an Australia-based private exploration company, and through the JV agreement the partners will explore for rare earth minerals on the license, where carbonatite has historically been explored for phosphate, rare earths, and niobium.

Under the terms of the JV agreement, REI has a 90 day due diligence period before binding agreements are signed. The Australian company will initially farm into the project by funding the project's development. Through Stage 1 it is required to spend US$750,000 over two years to define an initial JORC-compliant Inferred Resource. Stage 2 of the agreement sees REI spending a further US$600,000 over 18 months, to the define an Indicated JORC Resource.

REI will earn a 30% interest in the project in Stage 1 and a further 20% in Stage 2.

Subsequently, should ACR decline its co-funding option, REI can increase its interest further by completing a pre-feasibility in Stage 3 and a bankable feasibility study in Stage 4, taking its total stake to 65% and 75% respectively. If the partners co-fund these latter stages of project development, the JV will remain on a 50:50% basis.

ACR’s in-house work programme is now underway, with data compilation of historical reports nearly complete, and field visits  are  scheduled  for June-July.

Subsequently, the company will carry out extensive mapping and geochemical sampling programmes. Drilling  and metallurgical-extraction studies will be required  later to  assess  the  resources  at  depth, once  technical  and environmental planning is completed.