UK-based Katoro Gold has signed a joint venture (JV) agreement with Lake Victoria Gold (LVG) to develop the Imweru gold project in Tanzania, Australia.
Under the deal, Australian mining firm LVG will earn a stake of up to 80% in the project while Katoro will own the remaining 20% stake as a carried interest.
LVG will also be responsible for 100% of the JV’s funding requirements, as well as all debt funding.
The JV will reimburse previous expenditures, totalling €792,000, to Katoro on or before 31 December 2023.
The agreement follows the cancellation of the deal signed by Katoro in June 2020 to sell the Imweru project to LVG.
Katoro said that the administrative process to finalise the sale transaction’s registration has been indefinitely been delayed.
This was due to unexpected statutory barriers pertaining to the ownership transfer at project level.
In a statement, Katoro said: “This created a situation where no definitive schedule date could be established for the transfer of ownership and issue of the relevant milestone convertible loan notes.”
As a result, Katoro and LVG have decided to cancel the sale deal and instead signed a JV agreement.
The JV board will comprise three directors, of which two will be nominated by LVG and one by Katoro.
Katoro CEO Louis Coetzee said: “The decision to cancel the sale of the project and to enter a joint venture instead was a strategic decision by the Katoro Board to address challenges that made it impossible to complete the sale agreement within an acceptable time frame.
LVG is currently developing Imwelo Gold Project, located adjacent to the Imweru project.
Coetzee added: “We believe that the combination of the two projects will create a larger and significantly more economic project that will be able to attract suitable funding to accelerate the further development and exploitation of the combined gold mining project.”