Alecto Minerals PLC (LON:ALO) has agreed preliminary terms for Canadian junior Ashanti Gold Corp (CVE:AGZ) to farm-into the Kossanto East gold project in western Mali.
A letter of intent between the two companies has been agreed that will see Ashanti take up to a 65% stake by completing a preliminary feasibility study (PFS) within three years.
Ashanti will take over as the operator and at the end of the 36 month option a joint venture will be set up. Alternatively, it can pay US$4mln to take the 65% stake.
Kossanto East has a JORC-compliant resource of 247,000 oz gold currently.
Alecto had originally planned to work with neighbour Desert Gold, the owner of the tenement adjacent to Kossanto East, to develop a new mining district in Mali but this option is now on the backburner said Mark Jones, Alecto's chief executive.
“During the 2015 field season we worked closely with neighbouring Desert Gold Ventures Inc. to complete an internal scoping study for potential joint small scale production.
“Whilst the economics were positive, it was clear that both company's projects would benefit from additional exploration in order to maximise the potential for future production.
"Our proposed partnership with Ashanti will enable us to realise the full potential of Kossanto East.
“With the Gourbassi deposits open along strike and some excellent initial results from exploration targets such as Berola we are confident that together we will be able to build a larger mining play at this very exciting project area.
“In addition, the option remains to work with Desert Gold, should it serve the interests of all parties."
The agreement with Ashanti is the third farm-out in Mali Alecto has negotiated this year.
London-listed giant Randgold Resources (LON:RRS) has partnered with it at the neighbouring Kossanto West project while Karan in southern Mali is now a joint venture with Kola Gold.
The deals have followed Alecto's focus turning fully to the Matala and Dunrobin prospects in Zambia, where gold production is expected to by the second half of next year.