ALO.L Regulatory News (ALO)

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Alecto Minerals plc / EPIC: ALO / Market: AIM / Sector: Mining

12 May 2016

Alecto Minerals plc ('Alecto' or the 'Company')

Joint Venture with Cora Gold for the

Advancement of the Karan Gold Project in Southern Mali

Alecto Minerals plc (AIM: ALO), the Africa-focused gold and base metal exploration and development company, is delighted to announce that its wholly owned subsidiary, Newmines Holdings Limited ('Newmines'), has entered into an option and joint venture agreement (the 'Joint Venture' or 'JV') with Cora Gold Limited ('Cora Gold') for the exploration and development of the group's 250 km2 Karan Gold Project in southern Mali ('Karan'). Cora Gold is a wholly owned subsidiary of Kola Gold Limited ('Kola Gold'), an exploration and development company, which has an existing portfolio of gold projects in Mali and the Republic of Congo, including certain gold permits which are contiguous to Karan.

Highlights:

· The Joint Venture is in line with Alecto's strategy to retain exposure to potential upside generated from its African gold exploration portfolio whilst minimising expenditure

· Cora Gold will solely fund all exploration and development costs up to and including the completion initially of a scoping study ('Scoping Study') and ultimately a Bankable Feasibility Study ('BFS')

· Cora Gold will earn an interest of 65% in the Karan JV by solely funding exploration expenditure until completion of a Scoping Study and will earn a further 15% interest by solely funding exploration expenditure until completion of a BFS

· Accordingly, following completion of the BFS, Cora Gold will have earned, in aggregate, an 80% interest in the Karan JV, at which point Alecto may elect to either participate in future funding on a pro rata basis and retain its 20% interest, or decline the right to provide future funding and relinquish its remaining interest, such that Cora would then own 100% of the Karan JV

· Alecto will retain a 2% Net Smelter Return ('NSR') interest from any commercial production from the Karan permit area

· During the first 5 years of commercial production, Cora Gold will have the right to purchase the 2% NSR from Alecto for the sum of US$3m in cash

· The Karan permit will continue to be held by Newmines until such time as a new Joint Venture operating company ('NewCo') is established, at which point the parties will agree a mutually acceptable shareholders agreement

· On formation of NewCo, Newmines will transfer the then relevant permit(s) to NewCo, with the JV partners holding 90%, held in the same proportion as their respective interests in the JV, and the Malian Government expected to hold 10% in accordance with the convention de recherché in respect of Karan

· An initial work programme, led by the Cora Gold team, has already begun at Karan and includes geochemical and termite mound sampling, mapping of recently discovered gold occurrences and compilation of a substantial historical exploration database that includes approximately 12,000 metres of reverse circulation ('RC') and rotary air blast ('RAB') drilling, trenching and pitting

 Alecto's CEO, Mark Jones, commented:

"This JV agreement with Cora Gold, in respect of our expansive 250 km2 Karan permit in Mali, sees us deliver on our promise to shareholders to maintain exposure to any significant discoveries made across our West African gold exploration portfolio, whilst minimising the impact on our balance sheet, such that we can concentrate our efforts on bringing the group's Matala gold project in Zambia into commercial production at the earliest opportunity.

"Cora Gold is a natural JV partner for Alecto, owning adjoining permits to the south of the Karan permit. Cora Gold's management and technical staff have significant experience in finding and developing successful gold projects, both in Mali and across the wider region, and we look forward to them contributing their expertise on the ground at Karan."

Figure 1: Regional map showing the Karan Permit and proximity to other major gold projects (Please see PDF) 

Principal terms of the Joint Venture

Alecto, through its wholly owned subsidiary Newmines, and Cora Gold have entered into an option and joint venture agreement (the 'Joint Venture Agreement') in respect of the group's Karan permit in Mali.

Under the terms of the Joint Venture Agreement, Cora Gold will be solely responsible for funding exploration and development activities on the Karan permit up to the completion of initially a Scoping Study and ultimately a BFS. Cora Gold will earn-in for an interest of 65% by funding activities up to and including the completion of a Scoping Study, and will subsequently earn an additional 15% interest on completion of a BFS, taking Cora Gold's total potential interest to, in aggregate, 80%.

On completion of a future BFS, all costs will thereafter be split between the JV parties in accordance with their respective interests in the JV. Should Alecto elect not to contribute any future funding at that point, it will then relinquish its remaining 20% interest to Cora Gold and Alecto will retain no interest in Karan save for a 2% NSR from future commercial production. Cora Gold has been granted, for the first five year period of commercial production, an option to purchase, for cash, the 2% NSR for a sum of US$3m.

Cora Gold shall be appointed as Manager of the JV, with overall management responsibility for operations during the earn-in period.

Further information on Karan

The Karan exploration permit covers 250 km2 and is located in the southern Mali Birimian greenstone belt, two hours south-west of the capital Bamako, in the Siguiri Basin.

The permit geology comprises a thick sequence of thinly bedded and weakly metamorphosed Birimian rocks of green schist facies, argillite, siltstone and sandstone. The local structural framework has been interpreted from aerial magnetic survey data (ECL-Kevron, 2002) (see figure 2). Interpretation of the historical survey data highlights a north-westerly oriented structure striking diagonally across the centre of the permit. This feature is intersected by northeast-trending and cross-cutting east-west faults.

More recent exploration work on the project has included RC and RAB drilling by African Mining & Exploration plc, lag, bulk leach extractable gold ('BLEG') and stream sediment sampling by Newmont Mining Corporation and various regional mapping and geochemical sampling campaigns. Several vast areas of historical and active artisanal mining activity parallel to the north-westerly oriented structure, and new areas of mineralisation proving economic for artisanal miners are constantly being discovered.

Figure 2: Karan Permit aerial magnetic survey showing artisanal mining locations and interpreted north-westerly oriented structure (Please see PDF)  

The Cora exploration team has already completed a short programme of detailed (1:2,000) mapping around the peripheries of the artisanal mining sites, and collected circa 500 termite samples for analysis to provide an indication of the distribution of possible primary sources at the south-east end of the principal structure. The Company will provide further updates on exploration activities and results from the JV as and when appropriate.

About Cora Gold

Cora Gold is a wholly owned subsidiary of Kola Gold, a privately-owned, Africa-focused exploration and development company, whose objective is to acquire gold exploration projects in the highly prospective gold belts of west and central Africa and use its exploration and development experience to generate substantial stakeholder value through greenfield discoveries. The focus of Kola Gold, through its various subsidiaries, is on developing a diversified portfolio of gold projects in the highly prospective Birimian belts in Mali and the essentially unexplored Mayombe Gold Belt in the Republic of Congo (Brazzaville).

**ENDS**

For further information please visit www.alectominerals.com, follow us on Twitter @AlectoMinerals, or contact:

Notes to editors:

Alecto Minerals plc is an African focused, gold and base metal exploration and development company quoted on AIM with gold exploration projects in Zambia, Mali, Burkina Faso and Mauritania.

In Zambia, the historic Matala and Dunrobin gold mines have, in aggregate, a 760,000 oz Au JORC Code compliant resource estimate in the Measured, Indicated and Inferred categories at an average grade of 2.3g/t Au. The Company is focused on seeking to bring Matala into low-cost production in the near to mid-term.

In Mali, the Kossanto East project has an inferred JORC Code compliant resource estimate of 6.72Mt grading at 1.14g/t Au for an aggregate of 247,000 oz Au with a cut-off grade of 0.5g/t Au. This is under a co-operation agreement with ASX listed Desert Gold Inc. to evaluate the potential to jointly develop each company's neighbouring projects into production. The Kossanto West Project is under a joint venture with Randgold Resources Limited.

Alecto also owns the Kerboulé Project, located in the highly prospective Birrimian-age Djibo gold belt in northern Burkina Faso, as well as the wholly owned Wad Amour IOCG Project in Mauritania which is at an exploration stage.

Accordingly, the Company has a strong, diversified project portfolio with exciting exploration upside potential.