Exploration company Glencar Mining has announced that it has signed a letter of intent with gold producer Gold Fields that will see the Irish firm receive up to $40 million in funding.
The companies are to form a joint venture in relation to Glencar’s Komana licence in Mali, West Africa.
As part of the deal, Gold Fields is to spend up to €32 million on exploration and feasibility studies in return for a 65 per cent interest in the Komana license.
Gold Fields will be entitled to earn, through a staged earn-in arrangement, an undivided 60 per cent effective interest in the Komana project by incurring exploration expenditures totalling US$20 million over a four year period
The firm will also invest €3.2 million directly into Glencar in return for a 15 per cent stake in the company.
An annual exploration option fee of $1.25m will also be payable to Glencar over four years, totalling $5 million.
Glencar holds a 95 per cent interest in the Komana Project, and has an option to acquire the remaining 5 per cent stake from Petite Mine for USD1 million.
“We believe that the agreement with Gold Fields will provide certainty to the shareholders ofGlencar that the necessary exploration expenditure will be spent on the Komana project with limited additional equity dilution to the Glencar shareholders," said chairman Sean Finlay in a statement.
"The proposed joint venture builds on our well established relationship with Gold Fields and represents a strong vote of confidence by Gold Fields in the Glencar management, the Komana project in particular and Mali as a country in which to develop mineral resources,” he added.
