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Joint Venture with Randgold Resources for the Advancement of Kossanto West Gold Project in Western Mali
Alecto Minerals plc, the Africa-focused gold and base metal exploration and development company, has announce dthat Caracal Gold Mali SARL, its wholly owned subsidiary, has entered into a joint venture agreement with Randgold Resources (Mali) Limited for the exploration and development of Alecto’s 137 km2 Kossanto West Gold Project in western Mali comprising the Kobokoto Est and Koussikoto exploration permits.
Highlights
· Joint Venture, for the exploration and development of Kossanto West, is in line with Alecto’s strategy to retain exposure to its African gold exploration portfolio and upside generated whilst minimising exploration and development spend
· On completion of the Joint Venture:
– Randgold to fund all costs up to and including the completion of a pre-feasibility study on the Project
– Randgold will hold a 65% and Alecto will retain a 35% participating interest in the Permits
– On completion of a PFS, all costs will be split between the JV parties in accordance with their participating interest
– Permits will continue to be held by Caracal, until such time as the JV Committee forms a new company for the development of a mine
– On formation of NewCo, Caracal will transfer the relevant Permits to NewCo, with the JV partners expected to hold 90%, held in the same proportion as their respective interests in the JV, and with the Malian Government expected to hold 10%
· Initial work programme, includes further geological and mapping of Kossanto West with potential follow up pitting and trenching and reconnaissance drilling, anticipated to be undertaken by Randgold in the first 12 months.
· Kossanto East, where Alecto has reported positive economics from an internal Scoping Study, with the project subject to a collaboration agreement with Desert Gold Inc., is not included in the Joint Venture and remains wholly owned and operated by Alecto
Mark Jones, CEO of Alecto, commented:
“We are delighted to announce this important milestone agreement with Randgold, who are the market leaders in the establishment of world class gold projects in West Africa. Utilising Randgold’s expertise and financial muscle to unlock any opportunity allows us to retain exposure to the significant value we believe is available across our African gold exploration tenements, with minimal impact on our balance sheet.
“By bringing in such intellectual capital, and with Alecto not having to fund exploration work, the Company has been placed in a strong position to rapidly move its other projects towards development. The Company’s main focus in the near to mid-term is to bring our Zambian gold project, Matala, into production whilst Randgold completes the work at Kossanto West and Desert Gold helps us move towards development at Kossanto East. With a diversified and exciting portfolio, we look forward to updating the market on development progress throughout 2016.”
The Joint Venture
Caracal, Alecto’s wholly owned subsidiary, and Randgold, a wholly owned subsidiary of Randgold Resources Limited, have entered into the Joint Venture in respect of the advancement of Kossanto West.
On completion of the JV, Randgold will hold a 65% participating interest in the Permits with Alecto retaining a 35% interest and Randgold will be responsible for undertaking all exploration work over the Permits and funding all costs up to and including the completion of a PFS. On completion of a PFS, all costs will be split between the JV parties in accordance with their participating interest.
A joint venture committee will be formed on completion, comprising three representatives from Randgold and one from Alecto, to manage the JV and to approve, inter alia, the work to be undertaken and budgets for the Project, approval of a PFS and any decision to proceed with the development of a mine. The JV Committee will also be responsible for the decision to establish NewCo, at which point the relevant Permits will be transferred from Caracal to NewCo, with the Malian Government likely to be issued 10% of NewCo (being a free carried interest or such other holding as may be prescribed by Malian Law) and the JV partners expected to hold 90%. This will be held in the same proportion as each company’s respective interests in the JV, resulting in Randgold expected to hold 58.5% and Alecto expected to hold 31.5% respectively of NewCo, assuming that Randgold and Alecto maintain their respective participating interests at the same level subsequent to the completion of the PFS and the Malian Government being issued with 10% of NewCo. Alecto has guaranteed the due and punctual performance by Caracal of Caracal’s duties and obligations to Randgold under the Joint Venture agreement. Each party has pre-emption rights in the event the other party wishes to dispose of its participating interest in the Joint Venture.
The Joint Venture is conditional on certain matters that are in the ordinary course and are expected to have been satisfied by the end of February 2016.
