Elemental Altus Royalties has agreed to divest a 100% stake in the Korali-Sud Small Scale mining licence (Korali Sud) and Lakanfla exploration licence, together known as the Diba project, in western Mali to Allied Gold.

Under the sale and purchase agreement (SPA), Allied Gold will acquire a 100% stake in Elemental Altus Royalties’ subsidiary Legend Mali (BVI) III, which indirectly owns 100% of the Diba project.

In exchange, Allied Gold will provide a cash payment of up to $6m and grant a net smelter return (NSR) royalty of up to 3% on gold produced from the project.

The Diba project is located 15km south of the Allied’s Sadiola Gold Mine processing plant and is adjacent to the Sadiola large-scale mining licence.

The current shovel-ready resource at Korali-Sud Small Scale Mining Licence is to be incorporated into the Sadiola mine plan in 2024 and 2025, fast-tracking royalty revenue and cash payments to Elemental Altus.

Allied is planning to start an infill drilling campaign at the project to refine and expand the potential contribution to Sadiola’s near-term production profile.

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Following a competitive process, Elemental Altus chose Allied as the successful bidder because of the operational synergies with the latter’s adjacent Sadiola Gold mine complex.

The Sadiola Gold mine complex is considered one of the largest and longest-operating multi-open-pit gold mines in Mali.

Elemental Altus CEO Frederick Bell said: “Oxide material from the Project is expected to be fast-tracked to production at Sadiola, greatly accelerating the time to first royalty cash flows, while also mitigating risks associated with the construction of a new mine.

“The consideration is a tiered NSR royalty of 3.0% on the first 226,000oz that is expected to be fast-tracked into production from Korali-Sud, amounting to over 6,000 attributable ounces and thereafter a 2.0% NSR on all further ounces produced from the project. Additionally, there are upfront cash and milestone payments totalling up to $6m.”