London-based Nordgold has signed a definite option agreement with Columbus Gold to acquire a 50.01% interest in the Montagne d’Or Deposit in French Guiana.
The project is 100%-owned by Colombus and is located in the Guiana gold belt. It contains inferred gold resources of 4.15 million ounces at 2.22g per tonne of gold.
Under the deal, Nordgold has gained the exclusive rights to earn a 50.01% interest in Sotrapmag, the wholly-owned French subsidiary of Columbus Gold that owns the project, by completing a bankable feasibility study and by investing more than $30m over three years in staged work expenditures.
Following the deal, Sotrapmag will be the joint venture company.
Nordgold will also pay $4.2m to Columbus Gold by an initial cash payment no later than 21 May, which is mandatory and is not subject to conditions.
During the earn-in period, Columbus Gold will act as operator on the project and charge a 10% management fee on certain expenditures.
The 2014 work programme at the project is estimated to cost around $11.8m.
The agreement, which is subject to approval by the French Government, contains other standard provisions for an option agreement, including an extended area of interest, force majeure extensions and termination.
Nordgold chief executive officer Nikolai Zelenski said Montagne d’Or is an increasingly rare potential project of genuine quality and one that meets the company’s strict acquisition criteria in terms of scale, access to infrastructure and the high grade of the deposit.
"We have a proven ability to effectively develop new projects as the major achievement our Bissa mine in Burkina Faso demonstrates," Zelenski said.
"We are confident that Montagne d’Or offers similar shareholder value creating opportunities."