Canadian gold miner Iamgold is set to acquire about 51% of Avnel Gold Mining’s interest in the Kalana project in Mali, West Africa.

Under the agreement, Iamgold will invest $11m over three years on exploration activities of the project, in which Avnel owns an 80% interest.

Avnel will receive $1m cash and will issue warrants for Iamgold to acquire up to two million of its common shares at an exercise price of C$0.45.

The stake can be increased to 65% or 70% on completion of a feasibility study that supports the development of a gold mine, Iamgold said.

The Kalana project, in which the Malian Government also holds 20%, comprises an operating underground gold mine with an exploration property covering 387.4km2 with a 30-year mining exploitation permit.

Iamgold plans to carry out an initial $2.5m drill programme in the first year of the agreement that includes at least 6,500m of drilling to test the extent and nature of gold mineralisation.