Mako Gold Ltd (ASX:MKG) has signed a binding Memorandum of Understanding (MOU) with Geodrill (TSX:GEO) Limited for up to US$2 million of equity drilling on Côte d’Ivoire projects, an agreement that will allow Mako to maximise drilling metres while preserving cash.
As part of the agreement, Geodrill may subscribe for up to US$1 million worth of shares in Mako. Note drilling services will be at Mako’s discretion and will come in the form of reverse circulation (RC) drilling, diamond drilling (DD), or air core (AC) drilling.
Mako is looking to implement the drill-for equity facility on its upcoming drill programs and thus begin rapid recommencement of drilling on its flagship Napié Project.
The agreement is valid for 12 months, in two 6-month stages of up to US$1 million each.
“We are pleased to have secured a drill-for-equity agreement with such a high-calibre drilling company,” Mako’s managing director, Peter Ledwidge said.
“We have a long-standing relationship with Geodrill and have always been impressed with the quality of their work, including their extraordinary ESG initiatives in the communities where they operate. Geodrill has been on the MKG share register for some time, and we welcome their further investment in the company. This agreement provides more options for payment of drilling invoices and will assist in the rapid recommencement of drilling on our flagship Napié Project. We look forward to strengthening our ongoing relationship with Geodrill, which should be beneficial to all Mako stakeholders.”
Agreement details
Mako may issue shares to Geodrill, constituting up to 50% of the invoice for drilling services and pay the remaining balance in cash after each monthly invoice has been received.
The issue price for each share is to be the previous 15-day VWAP immediately prior to the date of the relevant monthly invoice.
Mako has access to this facility for 12 months and may, at its discretion, choose to pay 100% in cash; there is no obligation to drill a minimum amount or any amount at all.
Geodrill has agreed to a 3-month escrow on shares issued and must notify Mako of its intention to sell shares five days in advance.
Fourteen days’ notice is required if either company wants to terminate the agreement.
“Geodrill is proud to be partnering with Mako Gold on their Napié and Korhogo projects,” Geodrill’s CEO, Dave Harper said.
“We have had a long and successful relationship, having previously drilled on multiple discoveries with the management team in West Africa. One of the discoveries went on to become a major producing mine. The ‘drill-for-equity’ arrangement allows Mako to drill twice the meterage for the same cash burn, doubling the likelihood of success, while at the same time providing flexibility to revert to cash payment, should Mako elect to. We look forward to increasing our shareholding in Mako.”