The Company has 4 significant projects operating in the area: Suwar (Copper, Cobalt, Platinum); Al Hariqah (Gold); Wadi Qutabah (Nickel, Copper, Cobalt, Platinum); and Al Masna (Nickel, Copper, Cobalt). In November 2008, the Company signed a letter agreement with Vale International SA (“Vale”), a wholly-owned subsidiary of Companhia Vale do Rio Doce (NYSE: RIO, Vale), for the Company’s Suwar, Wadi Qutabah nickel, copper, cobalt and platinum group element projects in Yemen.
Vale may earn a 40% participating interest in the Suwar project if a pre-feasibility study is completed on or before July 31, 2012, US $3 million is spent on the Suwar project and a US $1 million option payment is made to Cantex. An additional 11% can be earned by completing a feasibility study and a further 9% interest can be earned by financing mine development and achieving commercial production. If Cantex’s share of mine development costs are carried through to production by Vale, they are recovered by Vale as a development loan from 80% of Cantex’s share of profits.
As of November 2009, Vale had met their US$2 million exploration expenditure commitment to the Suwar project and has committed to spending an additional US$1 million in 2010.
The agreement also allows Vale to enter into a joint venture with Cantex on any other nickel, copper or cobalt bearing property, including the Company’s Wadi Qutabah and Al Masna’a deposit, in Yemen. The obligations are similar for each individual property.
About Yemen: Cantex has been working in Yemen continuously since 1996 and, in that time, massive improvements have been seen in the country. When our geological team first arrived, the country was recently amalgamated (north Yemen and communist south Yemen joined in 1990) and, although the country was reportedly politically unified, the central government exerted little if any control over much of the countryside. Much of the country was divided into small enclaves which were each ruled by a local sheik. The sheik was the head of authority – he did not report to the government. The country was actually more of a series of loose knit alliances of these sheiks. When Cantex started its initial exploration our license covered in excess of 40,000 km2 – and worked predominantly in these small enclaves.
Back in the 1990’s Yemen was a pretty wild place. Upon arrival it was literally like stepping back in time – and not by only a couple of years. It was like moving back through time 1,000 years. The only sign that we weren’t in historic times was the ubiquitous presence of AK-47 assault rifles. These were on the back of every male over the age of 10. Though our team have not seen a gun brandished in a threatening manner, they were everywhere. After the initial shock, it became apparent that carrying an assault rifle in Yemen was similar to the average North American businessman wearing a tie to work – though they look impressive they really have little practical function. In Yemen, carrying a gun was sign that you’d come of age and were a man.
In the past 10 years Yemen has changed dramatically – and for the better. The government has heavily invested to better the lives of its citizens. The country is now connected with a modern road network, a national power grid and a cell tower network that puts Canada’s to shame. New schools are now found in even the smallest village and the kids are attending classes. Hospitals, established with the assistance of foreign partnerships are now prevalent through the larger cities. To top it off, carrying a weapon is now illegal. It’s difficult to even recognize the Yemen that existed when Cantex first started exploring there.
In the media Yemen has (at best) a tarnished image. It seems every week of late one hears of the conflict in the northern reaches of the country, separatist movements in the south, Al Queda training centers… Whilst these events are factual they present a very skewed image of what is actually happening on the ground. All expatriate staff/visitors that have been to our sites always comment that the Yemeni people are some of the friendliest people anywhere in the world and at no time they feel threatened. Most of Cantex’s expatriate staff, having been there once, are always asking to be posted back to Yemen!
Yes, not all areas of Yemen are as safe as our projects; however, it is important to know that the country as a whole is making great progress in uplifting the standard of living for the average Yemeni. We believe that this improvement in the lot of the average citizen will result in Yemen continuing to stabilize.
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