LONDON (Alliance News) - Alecto Minerals PLC on Thursday said it has entered into an agreement to partner Cora Gold Ltd on its Karan project in Mali which will allow the asset to be progressed at little cost to the London-listed miner.
The deal allows Alecto to retain its exposure to the gold project whilst minimising expenditure, but Alecto's interest in the project will unsurprisingly be reduced. Alecto is hoping it can focus on its Matala gold project in Zambia by offloading the cost burden at Karan.
Cora will earn a 65% stake in the project by funding all of the exploration expenditure on Karan until a scoping study has been completed, rising to 80% by funding further work up until a bankable feasibility study has been completed - meaning Alecto's expenditure will be minimal in the near term.
Notably, Cora Gold owns permits to the south of Karan, making the firm experienced in the area.
Once the bankable feasibility study is finished, Alecto will decide whether or not to commit to the project by providing further funding to cover its 20% stake for further work. Cora Gold would end up owning the project in full if Alecto decided to pull out at that stage.
Regardless of Alecto's decision, the company will keep a 2% net smelter return interest from any commercial production from Karan, but Cora Gold also has the right to purchase that interest within the first five years of commercial production for USD3.0 million.
The Karan project will continue to be held by Alecto's subsidiary until a new company is formed to hold the interests of the joint venture, which will introduce the government of Mali to the project.
Once the new joint venture company is formed, Alecto and Cora will hold a combined stake of 90% as a 10% stake will be awarded to the government.
Alecto and Cora will hold that 90% interest in the joint venture in the same proportion as their respective interests in the project prior to that 10% stake being issued to the government.
Cora will operate the project and lead the initial work programme that it will fund on its own, covering geochemical and termite mound sampling, mapping of recently discovered gold occurrences, and Cora will also compile historic data to analyse the asset.
The historic data covers previous work conducted on the permit area, including 12,000 metres of reverse circulation drilling and rotary air blast drilling, trenching and pitting.
Alecto shares were up 4.8% to 0.110 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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