Canadian firm Ashanti Gold has signed a letter of intent (LoI) with Alecto Minerals to earn a 65% interest in the Kassanto gold project in western Mali.

Ashanti will earn the interest after completing a preliminary feasibility study (PFS) within 36 months.

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In case, the company fails to complete the PFS within the option period, it may instead pay $4m to Alecto within 90 days of the end of the period.

At the time of the option period, Ashanti will operate the project’s exploration and development programmes.

"In the prevailing gold price environment, it is clear that there is a renewed interest in gold exploration."

Once the deal closes, Ashanti and Alecto plan to form a joint venture (JV) and contribute proportionally to the project’s exploration as well as development.

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Alecto Minerals CEO Mark Jones said: “We are delighted to announce such a positive step to potentially expand the exploration and resource potential at our Kossanto East Gold Project in western Mali.

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“Kossanto East was the exploration focus for our field teams throughout the 2013-15 work seasons, which culminated in the establishment of a JORC-Code compliant mineral resource estimate of 247,000oz Au.

“In the prevailing gold price environment, it is clear that there is a renewed interest in gold exploration; and our proposed partnership with Ashanti will enable us to realise the full potential of Kossanto East.”

The Kossanto East project located next to the company’s Kossanto West Gold project consists of a 66.41km² licence area located in the felsic volcanic rocks in between the Main Transcurrent Shear Zone (MTZ) and the SenegalMalian Fault (SMF) structures.

All field work in Mali is expected to resume in November this year.