Alecto Minerals, which is focused on gold and base metals in Africa, and Ashanti Gold Corp. have signed a binding option agreement, which concludes the proposals originally set out in the non-binding letter of intent announced on 22 August this year.
The terms of the option agreement with Ashanti are predominantly the same as those highlighted in the letter of intent, which outlines that:
- Ashanti has the exclusive right to earn in for a 65% interest in the project by completing a preliminary feasibility study within a period of 3 months.
- Ashanti will be required to maintain and keep the project’s licence in good standing during the option period.
- If an extension to the option period is required, Ashanti has the option to pay Alecto $140 000 for each 6-month extension, up to a maximum of 12 additional months, to complete the preliminary feasibility study.
- Should Ashanti not complete the preliminary feasibility study within the option period, it may elect to pay Alecto $4 million in cash to satisfy the earn-in requirement.
- If either party’s interest falls below 10%, then that party’s interest will convert to a 1.5% net smelter royalty. The other party will then have the right, for a period of one year thereafter, to purchase the net smelter royalty by paying $100 000 for each 0.1%.
- Additionally, Ashanti shall contract from Alecto certain management and corporate services in order to cost effectively start works on the ground and ensure that monies spent go directly towards exploration.
“We are delighted that the completion of Ashanti’s legal and technical due diligence has brought us to the point of finalising the option agreement for Kossanto East, and we now look forward to assisting Ashanti to start work on the ground,” says Alecto Minerals CEO Mark Jones.
“Alecto and Ashanti’s geologists have been on site and reviewed core and rock chip samples, surveyed the known resource area and have begun planning for the next phase of work.
“With our partners Randgold Resources also now active on the ground at the neighbouring Kossanto West project, we are delighted to have secured high levels of exploration activity at our projects in western Mali without the burden of funding such critical exploration work,” Jones adds.
“While these very exciting exploration projects are at an early stage, there is every opportunity for a significant discovery and we are confident that we have partnered with the best in the business to realise this potential.
“Our primary focus now is on finalising funding and delivering production at Matala and, in the interim, we must allow our partners to complete their planned exploration work, analyse the results and update us as they progress.