Toronto, Canada — MININGREVIEW.COM — 12 August 2009 – Canada’s Iamgold Corporation “’ a leading mid-tier gold mining company producing about one million ounces from seven mines on three continents “’says it has signed an agreement that will give it the option to acquire an interest in Avnel Gold Mining Limited’s Kalana project in the West African state of Mali.
The project consists of an operating underground gold mine and an exploration property with a 30-year mining permit. Avnel owns 80% of the project, with the Malian government holding the remaining 20%.
An Iamgold statement released here confirmed that the option agreement allowed Iamgold to earn an initial 51% interest in Avnel’s share of the Kalana project by spending US$11 million (R88 million) on exploration activities at the site over a three-year period, and by meeting certain other requirements.
Iamgold had the option to increase its interest further upon delivering a feasibility study that supported the development of a gold mine at the exploration site. The agreement with Iamgold would allow Avnel the opportunity to advance the Kalana project into a large-scale bulk mining operation.
The Kalana gold mine produced about 4 700 ounces of gold in the first quarter.
In terms of the option agreement, Iamgold will pay Avnel US$1 million in cash, and Avnel will issue Iamgold warrants to acquire up to 2 million of its common shares at an exercise price of 45 Canadian cents each.