Alecto Minerals plc, the Africa-focused gold and base metal exploration and development company, is delighted to announce that Caracal Gold Mali SARL (‘Caracal’), its wholly owned subsidiary, has entered into a joint venture agreement (the ‘Joint Venture’ or ‘JV’) with Randgold Resources (Mali) Limited (‘Randgold’) for the exploration and development of Alecto’s 137 km2 Kossanto West Gold Project in western Mali (‘Kossanto West’ or the ‘Project’) comprising the Kobokoto Est and Koussikoto exploration permits (the ‘Permits’).
- 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 (‘PFS’)
- 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 (‘NewCo’) 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. (‘Desert Gold’), 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 (‘Randgold Resources’), 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 (‘JV 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.
Figure 1: Regional setting of Kossanto West and proximal mines and significant deposits
Kossanto West comprises the Kobokoto Est and Koussikoto exploration permits which cover 137 km2 in western Mali, some 40km north-west of Randgold Resources 10Moz Au Loulo/Gounkoto complex and approximately 50km north-east of their 3m oz Au Massawa project in Senegal.
Kossanto West was part of the larger Kossanto Gold Project and was split from Kossanto East for geological reasons. At Kossanto East, Alecto has defined a JORC code compliant resource of 247,000 oz Au 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. The regionally significant Main Transcurrent Shear Zone (‘MTZ’) appears to change its strike direction from NNE to NNW, and exploration work completed by Alecto identified numerous high-grade gold targets coincident with this change of the MTZ. Initial scouting results reported in 2014 (see Operational Update 18 December 2014). Figure 2 below summarises some of the key results from Alecto’s previous exploration work at
Figure 2: Kossanto West, comprising the Kobokoto Est and Koussikoto exploration permits, showing interpreted MTZ and key exploration results from 2013/15 field work by Alecto
As at 31 October 2015, Kossanto West had gross assets of £0.6 million.
The Joint Venture Work Programme
With numerous gold occurrences having already been identified by Alecto as set out in Figure 2 above, Randgold is proposing to return to first principles in the Phase 1 work programme. This will include the completion of geological and regolith mapping, soil geochemistry, followup pitting and trenching, and detailed ground magnetic surveys, in order to more fully understand how these occurrences link up and to identify further targets. If results justify it, reconnaissance drilling will follow with either diamond core or RC drilling. It is expected that this work could be completed in the first 12 months of the Joint Venture at a cost of approximately US$1 million. The Phase 2 work programme will focus on completion of works to produce a PFS, with Phase 3 focused on undertaking works to enable the completion of a feasibility study.
Commenting on the work programme, Mark Jones added: “Randgold Resources’ exploration teams are arguably the most experienced and knowledgeable in identifying and developing significant resources in within the Kenieba Inlier in Mali which hosts Kossanto West. The structured work programme going forward will enable the JV to more rapidly identify an economic opportunity which we hope will propel the Company forward to yet another development project.”
About Randgold Resources
Randgold Resources is a FTSE-100 and NASDAQ listed African focused gold mining and exploration company. It is focused on creating value for all its stakeholders through the discovery of world class orebodies within the major greenstone belts of West and Central Africa. Its exploration is managed through the resource triangle as an integrated business tool and it defines economic deposits as 3Moz of mineable gold with a minimal internal rate of return of 20% at a long term gold price of $1000/oz.
Randgold Resources has developed and operates five world class gold mines – with all but one developed on deposits discovered by its own geologists. Loulo, Gounkoto and Morila in Mali; Tongon in Côte d’Ivoire and Kibali in the Democratic Republic of the Congo. It attaches importance to the process of discovery, evaluation and eventual development in order to create value. Randgold is also committed to creating lasting benefit for its host countries and the communities around their operations ensuring that the lives of stakeholders are improved.