UK-based Armadale Capital is to form a joint venture with Kisenge Mining to manage the Mpokoto gold project in Katanga Province, the Democratic Republic of Congo.
Under the first phase of a heads-on agreement, Kisenge Mining can earn a 25% interest in Kisenge Limited, a subsidiary of Armadale, by funding and offering other project-related services.
After this phase, Kisenge Mining will have 30 days to make its decision on the second phase of the agreement.
If Kisenge Mining decides to proceed, it will need to arrange funding to commence production at the Mpokoto mine.
Under the second phase, the company could procure an additional 60% interest in Kisenge Limited, if it arranges 100% funding and Armadale validates that it has fulfilled all its obligations.
Armadale chairman William Frewen said: “Mpokoto has an established resource of 678,000oz of gold (‘Au’) at 1.45 g/t Au and has completed a DFS based on a production rate of circa 25,000oz annually over an initial four-year mine life for the first phase of mining.
“With attractive economics and a defined route to production we are confident that the project offers significant potential and we are pleased that the completion of Kisenge Mining’s due diligence has led to the commencement of Phase I of the joint venture agreement.
“Kisenge Mining will assume operational responsibility and provide funding to further advance Mpokoto. The board is optimistic that once Kisenge Mining has completed the revised DFS and other work it will progress to Phase II of the joint venture agreement to bring Mpokoto into commercial production.
“If this materialises, Armadale will enjoy the benefits of owning a material interest in a producing gold mine.
“This development means that management’s efforts and resources can remain focused on progressing the next phase of the Mahenge Liandu graphite project, where an initial JORC resource estimate is anticipated in the coming weeks, followed by further news in Q1 2017 relating to the results of metallurgical test-work and commencement of feasibility work.”
The Mpokoto project consists of four mining licences that are valid for 30 years from 30 September, 2014, and also comprises 800,000 ha of unexplored areas.