Acacia Mining has signed a binding conditional agreement to end the earn-in agreement with Sarama Resources over the latter’s South Houndé gold project in south-western Burkina Faso.
The termination of the earn-in agreement is subject to the companies agreeing upon definitive documentation by 30 April next year.
Under the terms of the 2014 earn-in deal, Acacia Mining could acquire up to 75% in the South Houndé project by funding $14m of exploration costs over a period of four years and declaring a mineral reserve of at least 1.6Moz Au.
Acacia stated that the divestment of the project is in line with its strategy of offloading non-core assets.
As part of the termination agreement, Sarama can now regain 100% ownership of the project by paying $2m to Acacia in tranches.
Additionally, Acacia will be entitled to receive a further $2m once Sarama begins commercial production at the project.
The agreement also offers the company an improved net smelter return royalty (NSR) of 1-2%.
Meanwhile, Sarama will also grant five million warrants for common shares in the company to Acacia. The warrants will be exercisable for five years.
In a statement, Acacia Mining said: “Acacia remains committed to exploration in Burkina Faso with various earn-in agreements still active and which provide exposure to approximately 2,000km² of the prospective Houndé Belt.”
The South Houndé project, which has an inferred mineral resource of 2.1Moz Au, is contiguous to Sarama’s wholly-owned ThreeBee project.
Regaining a 100% interest in the project will allow Sarama to increase its interests in the southern Houndé Belt to around 1,400km².
Sarama Resources president and CEO Andrew Dinning said: “This agreement is fundamental to consolidating our position in the southern Houndé Belt and puts Sarama on a solid footing to advance its interests towards mine development.
“Sarama looks forward to framing up the development opportunity and re-commencing exploration work which will focus on attractive oxide and free-milling targets in the greater project area.”