Eurasia Mining (LON:EUA) has signed a heads of terms agreement for a majority stake in a gold tailings project in Russia.
The deal gives Eurasia an exclusive right to up to a two-thirds interest in the Semenovsky tailings project in Bashkiria.
A processing plant at the Semenovsky mine ran for 55 years up to 1998 processing oxide ores from four local deposits.
Eurasia has a six month window to carry out technical studies and other due diligence.
Construction costs would be US$5mln, which could be paid back within a year, while early internal projections suggest gross revenue of approximately US$57mln over 8 and half years.
Net cash inflow would amount to approximately US$29mln or US$3.5m per year.
Metal Tiger (LON:MTR) has also agreed an option that could see it become involved in the project under its collaboration agreement with Eurasia.
It is potentially the first joint venture since they agreed to work together on projects in Russia at the end of 2014.
Metal Tiger has paid $25,000 to Eurasia for its three month option and will pay a further US$75,000 if it decides to participate.
Christian Schaffalitzky, Eurasia Mining’s managing director, said if successfully implemented, the project would see gold production to compliment platinum production in 2016 at the West Kytlim project.
“Our initial work demonstrates that the project economics are extremely robust and that this project could provide a considerable boost to the company.
“Our experience in-country in Russia, and our potential access to local project level financing partners, gives the board confidence that, save for project due diligence and planning, the capital cost of plant construction may be secured by in-country debt finance.
“Furthermore, should we secure the commitment of Metal Tiger to fund the exclusivity period costs, Eurasia Mining will be free carried through this initial stage of the project work.”