Sylla Gold has signed a definitive option agreement to acquire an indirect 100% interest in an exploration permit, namely the Niaouleni Project in the gold-bearing Birimian rocks of southern Mali.

The agreement was reached with Niaouleni Gold and its wholly owned unit, Niaouleni Gold Mali SARL (Niaouleni SARL).

This follows the signing of a non-arms length, non-binding letter of intent for the same.

Covering a 9,400ha area, the Niaouleni Project includes extensive artisanal mining activity within the interpreted extensions of gold-bearing structures.

According to the agreement, Sylla has the option to acquire the project over a 36-month period by making cash payments to Niaouleni Gold in tranches and issuing Sylla Gold common shares to Niaouleni Gold.

The firm is also required to incur the project’s exploration expenditure of $1.38m.

Following extensive reverse circulation and diamond drilling on the project conducted in the past, several structural gold-bearing zones were identified that appear to extend from the adjacent Kobada gold deposit.

Sylla Gold said that historical exploration and drilling results, which are being compiled into a digital database, will be interpreted for the purpose of designing a drilling programme.

The drilling work aims to further test these structural gold-bearing zones.

Earlier, Sylla Gold president and CEO Regan Isenor said: “We are very excited by the prospect of acquiring a strategic piece of land in one of the most prolific gold jurisdictions in the world.

“Past work on the Niaouleni Project has been successful in defining gold-bearing structures with a significant grade, which presents immediate drilling targets for the company to determine the extent of these structures.”

In case of exercising the option, Sylla Gold will grant net smelter returns royalty (NSR) of 3% in favour of Niaouleni Gold. This would be contingent on the firm’s ability to purchase up to 2% of the NSR for up to $2m in the purchase price.

The transaction is subject to regulatory and other approvals.