Junior gold explorer Goldstone (LON:GRL) has signed a farm-in deal with Randgold Resources (LON:RRS) to fund exploration of Goldstone's Sangola deposit in Senegal.
Exploration of the deposit will now proceed as a joint venture, with Randgold to take a 51% stake in return for funding to the completed pre-feasibility study (PFS) stage.
Goldstone can then elect to contribute towards a feasibility study or dilute to 35%.
Randgold has committed to at least 10,000 metres of reverse circulation drilling per annum up to the completion of the PFS, which must indicate that mining of at least 1mln ounces of gold is economically feasible.
The joint venture will be terminated if that milestone is not reached.
Jurie Wessels, Goldstone’s chief executive, said he was delighted with the agreement, which will see it retain a material interest in the project while removing any funding requirement until the project has advanced significantly.
Randgold has an exceptional track record of finding and developing gold projects in West Africa, he added.
Africa-focused Randgold, which has projects already producing in Mali, the Ivory Coast and under development in the Democratic Republic of the Congo (DRC), said at the end of last month it was keen to step its joint venture activity with juniors.
Sangola is bisected by a major gold bearing shear zone known as the Main Transcurrent Shear Zone ("MTZ"). This shear zone is host to Randgold's 3mln ounce Massawa deposit, which lies 30 kilometres towards the north-east of the Sangola licence area.
Three major elongated gold-in-soil anomalies - Baraboye, Tiabedji and Tiobo, all of which are associated with underlying structures related to the MTZ - have been identified and explored by Goldstone.