Oriole Resources PLC (AIM:ORR) said it will shortly undertake a review of the project expenditure at the Senala gold project in Senegal and decide the next steps, where partners AGEM and Managem Group have just completed a six-year earn-in period.
The AIM-listed company currently has an 85% interest in Stratex-EMC, the vehicle that holds the Senala exploration licence.
AGEM Senegal Exploration, a wholly-owned subsidiary of Managem, has spent roughly US$5.8 million on developing Senala since an option agreement was signed in early 2018.
Managem said AGEM's beneficial ownership position in the Senala licence is now estimated to be 59%, with Oriole's review aiming to confirm this percentage ownership.
Talks are underway on the next steps, it said, including forming a joint-venture company and associated technical committee; Managem submitting a work plan and budget; and a decision from Stratex-EMC on whether to contribute to the work costs or dilute its percentage ownership.
"On the basis that Stratex-EMC does not contribute, it is estimated that Managem would need to spend a further US$31 million at the project to dilute Stratex-EMC below 10%, after which its interest would convert to a 2% net smelter returns ('NSR') royalty," Oriole said.
A renewal application has also been submitted for a further three-year term, with the decision still awaited.
Update: net smelter returns were previously stated at 2.5% but a new statement corrected this to 2%.