Johannesburg, South Africa — MININGREVIEW.COM — 21 February, 2008 – Pan African Resources plc – an African-based exploration, development and mining company – has reached an agreement to acquire a 90% interest in the licence rights of a potentially strong gold producing property in southern Ghana.
In an announcement here yesterday the company revealed that it had signed an earn-in agreement with SEMS Exploration Services Limited (SEMS) to acquire, in three stages, a 90% interest in the licence rights of the Kyereboso Exploration Property.
The exploration licence covers an area of 16km². Pan African also has access to a geological database collected over twelve years, comprising 1 070m of mapped underground adits, soil and stream sampling grids, ground geophysics, three dimensional structural modelling and 2 200m of RC and core drilling.
The announcement explains that Pan African will pay SEMS US$200 000 (R1.5 million) within ten days for an exclusive option to conduct first-phase exploration activity on the property for a period of 12 months, and will bear the annual costs of approximately US$15 000 (R112 000) to keep the exploration licence in good standing. After completion of the first phase of exploration, Pan African shall be entitled, but not obliged, to proceed to the second exploration phase.
“Upon completion of the first exploration phase – by which time the company expects to have a robust geological model to assess the prospects of the project – Pan African will be granted another sole and exclusive right to explore the property for another 12 months,” the statement adds. “In consideration for this right, the company will pay SEMS the sum of US$150,000 (over R1.1 million) and issue SEMS 3 million ordinary shares of 1p each,” it says.
Upon completion of the second exploration phase, and provided that the company has not spent less than US$1 million (R7.5 million), it will have earned an interest of 50%.
The announcement adds that Pan African can acquire a further 20% interest (total interest 70%) from SEMS until the completion of a bankable feasibility study for a consideration of US$400 000 (R3 million). “Upon commencement of mine construction the company can acquire a further 20% interest (total interest 90%) by paying SEMS 1.5% of the net present value of the project as determined by BFS, as well as granting SEMS a royalty of US$5 per ounce of gold produced for the first 500 000 ounces, after which the royalty amount will be reviewed pending economic conditions,” it continues.
The remaining 10% interest in the project will be transferred upon the commencement of mining to the Ghanaian government as a free carry, as per Ghanaian mining legislation.