Canada-based Iamgold has signed an option agreement with Sarafina to explore properties surrounding its Rosebel mine in Suriname.
Under the five-year option agreement, Iamgold's subsidiary, Rosebel Gold Mine (RGM) could earn a 100% interest in Sarafina's 10,000ha mining concession.
Iamgold said that it could exercise its right to buy the property at any time, for $1m in cash.
In order to maintain the purchase option, RGM is required to make scheduled option payments totalling $575,000 over five years.
The agreement could be cancelled at any time and, should the project proceed to production, Sarafina would be paid a net smelter return royalty of 1.6% for any gold produced from the property.
Iamgold president and CEO Steve Letwin said Rosebel has been a great mine for the company.
"In its first ten years, Rosebel produced more gold than defined in its original mineral reserve. Its future reserves are becoming more challenging and expensive to process due to an increasing proportion of hard rock," Letwin said.
Letwin noted that the Sarafina property has the potential to yield new discoveries of higher-grade, softer rock that could be mined with a lower stripping ratio than the company's current operations.
"The new agreement opens the opportunity to reinvent Rosebel, lengthen its reserve life, lower its unit operating costs and improve its contribution to the Government of Suriname, the local community and our investors," Letwin added.
The property is located within the unincorporated joint venture (UJV) area that was negotiated with the Government of Suriname in 2013.
RGM owns 70% in the UJV and the remaining 30% is held by the government.
Iamgold said the Sarafina property lies within a north-west trending belt of sheared mafic volcanics immediately along strike of the previously discovered Saramacca gold deposit.
The project has been the site of previous exploration and on-going small-scale mining and is believed to hold undiscovered gold deposits.
The company said it will complete a compilation of all historic exploration data to determine priority targets for follow-up, and will have its exploration team active on the site immediately.