LONDON (Alliance News) - Kolar Gold Ltd Thursday said it has agreed to establish a joint venture to develop gold exploration and mining assets in Finland with Mineral Exploration Network (Finland) Ltd.
The India-focussed gold exploration and mine development company has entered into a memorandum of understanding with Mineral Exploration to provide up to EUR1 million to earn up to 50% of a joint venture company to be incorporated in Finland.
This venture will develop greenstone belt gold licences in the Suomussalmi region of eastern Finland. A greenstone belt is an area underlain by metamorphosed volcanic and sedimentary rocks, named for the green hue from the colour of the metamorphic minerals.
Kolar will initially pay EUR150,000 in cash for 150 new shares in the joint venture company, and will issue Mineral Exploration with 8.5 million new shares in Kolar Gold, at an implied price of 1.6 pence, representing EUR150,000 in exchange for 150 existing shares in the joint venture company held by Mineral Exploration.
Shares in Kolar Gold were down 1.3% at 1.73p Thursday.
Kolar and Mineral Exploration will complete a joint venture agreement by the end of February 2017.
"This is a defining deal that sees Kolar secure commercial and operational rights to highly attractive gold assets in Finland, providing exposure to a second jurisdiction, a cornerstone objective of the company's corporate strategy, whilst we concurrently progress our interests in India," said Chief Executive Officer Cameron Parry in a statement.
"Our new JV partners are well known to us, and I am very pleased to have the opportunity to work with them again. It is particularly exciting that we now have the potential to generate cashflow from one of our Finland targets next year, helping achieve Kolar's fundamental business objective to build value, generate cashflow and mitigate risk," Parry added.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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