Randgold Resources (Mali) has entered into a joint venture agreement with Africa-focused gold and base metal company Alecto Minerals’ wholly owned subsidiary Caracal Gold Mali SARL for the exploration and development of Alecto’s 137 km2 Kossanto West gold project in Mali.
On completion of the JV, Randgold will hold a 65% participating interest in the permits with Alecto retaining a 35% interest. 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.
“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,” says Mark Jones, CEO of Alecto.
“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.”
Alecto’s main focus in the near to mid-term is to bring its Zambian gold project, Matala, into production whilst Randgold completes the work at Kossanto West and Desert Gold helps it move towards development at Kossanto East.
Kossanto West comprises the Kobokoto East and Koussikoto exploration permits which cover 137 km2 in western Mali, some 40 km north-west of Randgold Resources’ 10 Moz Au Loulo/Gounkoto complex and approximately 50 km north-east of its 3 Moz gold Massawa project in Senegal.
At Kossanto East, Alecto has defined a JORC code compliant resource of 247 000 oz gold and recently completed an internal scoping study which returned very positive economics for a small-scale, low-cost, development.
Kossanto East is not part of the Joint Venture and remains 100% owned by Alecto. As previously announced, work continues to assess the potential for jointly developing Kossanto East alongside Desert Gold’s neighbouring gold deposit, Barani East.
It is interpreted that a major structural event occurred within the permit boundaries of Kossanto West. As at 31 October 2015, Kossanto West had gross assets of £0.6 million.