Ashanti, Alecto to jointly develop Mali gold project

Canadian junior Ashanti Gold (CVE:AGZ) has signed a non-binding letter of intent (LOI) with Alecto Minerals (AIM:ALO), which will allow it to earn a 65% in the Africa-focused firm’s Kassanto gold project in western Mali.

As part of the deal, Ashanti will become the operator of the project during a 36-month option period in which it would have to complete a preliminary feasibility study (PFS).

As part of the deal, Canada's Ashanti Gold will become the operator of the Kassanto project during a 36-month option period in which it would have to complete a preliminary feasibility study.

Should Ashanti not finish the PFS within the period, it may instead elect to pay, in cash, $4 million to Alecto within 90 days of the end of three-year-period in order to satisfy the earn-in requirement, Alecto said in a statement.

After the option period, and on completion of the earn-in agreement, both firms will form a joint venture (JV), contributing proportionally to Kassanto’s continuing exploration and development.

Alecto had originally planned to work with Desert Gold, the owner of the tenement adjacent to Kossanto East, to develop a new mining district in Mali. But the company’s chief executive Mark Jones said that plan has been postponed for now.

“During the 2015 field season we worked closely with neighbouring Desert Gold Ventures Inc. to complete an internal scoping study for potential joint small scale production,” Jones said in the statement.

“Whilst the economics were positive, it was clear that both company's projects would benefit from additional exploration in order to maximise the potential for future production,” Jones noted.

Alecto said the proposed partnership with Ashanti will enable the firms to realize the full potential of Kossanto East, which currently has a JORC-compliant resource of 247,000 ounces of gold.