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Altus Strategies to form JV with Glomin in Mali

2019-08-22 09:11 ET - News Release

Mr. Steven Poulton reports

JOINT VENTURE TERM SHEET SIGNED ON LAKANFLA & TABAKOROLE GOLD PROJECTS IN MALI

Altus Strategies PLC has signed a non-binding term sheet with Glomin Services Ltd., for a joint venture (JV) on the company's Lakanfla and Tabakorole gold projects located in western and southern Mali, respectively.

Highlights:

  • Subject to concluding a definitive agreement and the progress of the JV:
    • Altus will receive up to $1.45-million (U.S.) in milestone cash payments.
    • Altus will retain a 2.5-per-cent net smelter return (NSR) royalty on the projects.
    • Altus will be the operator of the JV during the initial earn-in period.
    • Glomin will earn up to an 80-per-cent initial interest in the projects.
  • Glomin will pay Altus $50,000 (U.S.) for exclusivity within five days of signing the term sheet.
  • An initial 5,000-metre drilling campaign at the Lakanfla and Tabakorole gold projects in Mali:
    • Lakanfla historical drill results include 26.0 metres (m) at 5.10 grams per tonne (g/t) gold (Au) and 12.0 m at 9.78 g/t Au.
    • Lakanfla is located six kilometres (km) southeast of the Sadiola gold mine.
    • Tabakorole historical drill results include 60.0 m at 2.92 g/t Au and 44.0 m at 3.29 g/t Au.
    • Tabakorole and Lakanfla are two of six exploration projects owned by Altus in Mali.
  • JV remains subject to 60-day due diligence and other conditions precedent.

Steven Poulton, chief executive of Altus, commented:

"We are delighted to have signed this term sheet with Glomin for a JV on our highly prospective Lakanfla and Tabakorole gold projects in Mali. Upon entering a definitive joint venture agreement, Glomin will have the option to acquire up to an initial 80-per-cent interest in each project by completing a definitive feasibility study. In return, Altus will receive up to $1.5-million (U.S.) in cash, retain equity in the projects and up to a 2.5-per-cent NSR on the projects. This transaction underscores the company's strategy of making and monetizing discoveries, while also growing a valuable portfolio of project equity and royalty interests.

"Strategically located adjacent to the world-renowned Sadiola gold mine in western Mali, at which oxide resources are reportedly now exhausted, the Lakanfla project contains a major area of historical artisanal gold workings. Historical drilling results include 5.10 g/t Au over 26.0 m, 9.78 g/t Au over 12.0 m and 5.61 g/t Au over 14.5 m. Based on our review of historical data, we believe that Lakanfla hosts a potentially substantial karst-style gold target, analogous to the adjacent FE3 and FE4 pits of the Sadiola mine and the former Yatela mine, located just six km and 35 km to the northwest respectively. Separately, the Tabakorole project, located in southern Mali, targets a shear zone which is reportedly up to 200 m wide and coincident with a 2.7-kilometre-long gold-in-soil anomaly. Historical drilling results to date at Tabakorole include 2.92 g/t Au over 60.0 m, 3.29 g/t Au over 44.0 m and 9.31 g/t Au over 16.0 m."

Subject to entering definitive joint venture, shareholder and royalty agreements with Altus, Glomin will have the option to earn up to an initial 80-per-cent interest in Legend Mali (BVI) II Inc., a wholly owned subsidiary of the company. Through its Malian subsidiary, Legend holds a 100-per-cent interest in the projects. Glomin may earn its interest by financing the exploration and development of the projects. The term sheet is subject to exclusivity provisions for 60 days following signing.

Headline JV terms

Subject to the execution of the agreement, Glomin will have the option to earn up to an 80-per-cent initial interest in the projects in three initial stages on the following headline JV terms:

  • Stage 1 (exploration): Glomin will make a cash payment to Altus of $50,000 (U.S.) at the commencement of the stage. Glomin will have the right to earn an initial 33-per-cent interest in the projects by undertaking 5,000 m of drilling with up to 1,500 m at the Tabakorole project and 3,500 m at the Lakanfla project within 12 months of entering the agreement.
  • Stage 2 (resource definition): Within 30 days of the completion of stage 1, Glomin will make a cash payment to Altus of $200,000 (U.S.). Glomin will have the right to increase its interest in the projects (or each respective project only) to 51 per cent by undertaking 9,000 m of drilling at the Lakanfla project (or publishing a JORC-compliant resource of more than one million ounces of gold) and 2,500 m of drilling at the Tabakorole project, within 18 months of electing to enter stage 2.
  • Stage 3 (definitive feasibility study): Within 30 days of the completion of stage 2, Glomin will make a cash payment to Altus of $200,000 (U.S.). Glomin will have the right to increase its interest in the projects (or one project only) to 80 per cent by completing a definitive feasibility study on each project, within 24 months of electing to enter stage 3.
  • Stage 4 (mine construction): Within 30 days of the completion of stage 3, Altus will have the option to co-finance stage 4 pro rata to its interest in the JV, or grant Glomin the right to sole finance stage 4. If sole financing stage 4, Glomin will make a cash payment to Altus of $1-million (U.S.) and have the right to increase its interest in the projects by commencing gold production on either of the projects. The interest earned by Glomin in stage 4 will be calculated on the basis of straight line dilution based on the total investment by Glomin in the JV up to the commencement of stage 4.

Altus will be the operator of the joint venture during stage 1 on an at-cost-plus-10-per-cent basis. Exploration budgets and work programs will be agreed by a JV committee comprising up to two representatives of each of Glomin and Altus. Each party shall have one vote; however, any party sole financing will have a casting vote. If co-financing, each party shall vote in accordance with its participating interest in the JV. The drilling programs in stages 1 and 2 will be undertaken by Capital Drilling Ltd. and, thereafter, the drilling contractor will be selected by the party managing the JV.

Glomin may withdraw from the JV at any time. If Glomin elects to withdraw from the JV at any stage after the completion of stage 2, it will receive a 0.75-per-cent NSR royalty on future gold production from the projects in exchange for withdrawing. This NSR royalty will be capped at the amount invested in the JV by Glomin at the point of withdrawal and can be repurchased by Altus at any time for a cash sum equivalent to this amount plus 10 per cent. Altus will retain a 2.5-per-cent NSR royalty on the projects. Glomin will have the right to repurchase up to 1.5 per cent of each NSR for between $3.33-million (U.S.) and $5-million (U.S.) for each 0.5 per cent, with the amount dependant on the size of the resource of the project at the time of repurchase. Either party may sell its interest in the JV, but must first offer it to the other party at the price and terms offered by the new purchaser. If Glomin sells its interest in the JV, it will not receive the NSR royalty that it would have otherwise received from having withdrawn from the JV.

Glomin will have the right to vend its interest in the JV into an Australian Securities Exchange-listed company (VendCo), subject to that company assuming all obligations under the JV, it having sufficient financial resources and the approval of Altus. If Glomin vends its interest into VendCo, then VendCo will have the option of making the cash-only milestone payments, or it can elect to pay to Altus as applicable, no cash and $100,000 (U.S.) in VendCo equity at the commencement of stage 1, $100,000 (U.S.) in cash and $200,000 (U.S.) in VendCo equity at the commencement of stage 2, $100,000 (U.S.) in cash and $200,000 (U.S.) in VendCo equity at the commencement of stage 3 and, if VendCo is sole financing stage 4, then $500,000 (U.S.) in cash and $750,000 (U.S.) in VendCo equity at the commencement of stage 4. The number of shares in VendCo to be issued to Altus will be calculated by reference to the lower of the price on the ASX at the time of electing to go to the relevant next stage, or the 60-day volume-weighted average price as at that date.

The agreement is expected to include standard change of control and default provisions and will also provide for Glomin with the option to request a three month pause of JV operations at any time after the completion of stage 1.

Lakanfla project: location

The 24-square-kilometre Lakanfla gold project is located five km east of the company's Diba oxide gold project and approximately 6.5 km southeast of the karst-type FE3 and FE4 open pits of the multimillion-ounce Sadiola gold mine and 35 km southeast of the former multimillion-ounce Yatela karst-type mine. Lakanfla is bounded by the Sadiola permit area on its north, west and southern boundaries. Sadiola and Yatela are both part owned by Anglogold Ashanti and Iamgold Corp.

Lakanfla project: karst geology

Karst-style deposits are known to form from the dissolution and collapse of carbonate (limestone) rocks. The weathering of these rocks, if originally mineralized with low-grade gold and sulphides, can result in the precipitation of a higher-grade supergene and potentially economic gold mineralized residuum, above a more resistant basal layer. The dissolution of the limestones often means such deposits are associated with geophysical gravity lows, resulting from the formation of voids at depth. They may also contain sands and other more recent geological materials occurring unconformably in the geological sequence. These materials will have either been windblown, or collapsed into the depression created during the karstification (dissolution) process.

Lakanfla project: karst targets

At Lakanfla, a consistent series of gravity lows exists, as defined by a ground gravity survey completed in 2014, which are yet to be drill tested. The lows are up to 0.5 km wide and have a total strike length of approximately four km. They are hosted within marbleised lithologies surrounding a granodiorite intrusion and its associated hydrothermal aureole. Surface sagging features, considered to be a result of the formation of dissolution voids at depth, have been mapped as being more than 100 m long in places and these are also often coincident with the gravity lows. A number of the gravity lows are adjacent to north-south-trending artisanal gold workings and are coincident with apparent gradient array IP resistivity lows. Interpretation of the residual IP anomalies has defined a series of intersecting regional and local shear structures, which are considered to have potentially promoted the karst formation process. The gravity lows and lithological trends may indicate areas of deep weathering of altered calcareous sediments, dissolution collapse and potential supergene gold deposition.

None of the priority targets defined by Altus have been systematically drill tested to date. Of the historical drilling that has been undertaken at Lakanfla, 35 holes coincide with the priority targets. However, the majority of these holes were drilled were no deeper than 75 m vertical depth. One was drilled deep enough to test the karst potential, attaining a vertical depth of 161 m. Critically, this drill hole (04KDD-08) was located on the margin of a gravity low, reached the target depth and terminated in loosely consolidated sand (from 165 m to 171 m), having also passed through voids and unconsolidated material. The Company considers that this hole provides strong evidence for the presence of a potential karst-type system.

Lakanfla project: exploration history

Historical exploration at Lakanfla has included soil sampling across the entire licence area, on a 500-metre-by-250-metre (and in places, 250 m by 100 m) sample grid. The program defined a number of anomalies which were further refined by shallow auger drilling. Follow-up diamond, RC and RAB drilling programs primarily targeted shallow gold mineralized breccias. The breccias are also the primary target for artisanal gold miners, the workings of which extend for approximately 2.5 km of strike length. The majority of the drilling at Lakanfla was completed between 2001 and 2011.

        SELECTED LAKANFLA DRILL INTERSECTIONS

Hole ID          From        To   Intersection  Au grade
                   (m)       (m)            (m)     (g/t) 

04KRC-02           32        58             26       5.1
01KRAB-03          12        24             12      9.78
04KDD-06           34      48.5           14.5      5.61
04KDD-04          105       165             60      1.02

A series of geophysical programs have been completed at Lakanfla, including ground-based induced polarization, high-resolution resistivity, magnetic and gravity surveys, as well as airborne VTEM and gravity surveys. Significantly, the completion of the ground gravity survey, which generated the Karst targets on the margins of the granodiorite intrusion, post dates all of the drilling completed at Lakanfla to date.

Tabakorole gold project

The 100-square-kilometre Tabakorole project is located in southern Mali, approximately 280 km south of the capital, Bamako. The project sits on the Massagui belt which hosts the seven-million-ounce Morila gold mine operated by Barrick Gold Corp. (formerly Randgold Resources Ltd.). Exploration to date has identified a 2.7-kilometre-long shear zone which is up to 200 m wide.

       SELECTED TABAKOROLE DRILL INTERSECTIONS

Hole ID         From      To   Intersection    Au grade
                  (m)     (m)            (m)       (g/t)

05FLRC-51         80      96             16        9.31          
05FLRC-11         14      74             60        2.92          
05TKRC-18         24      68             44        3.29          
10FLRC-12A        12      30             18        6.05          
10FLRC-07          4      42             38        2.64          
10FLSRC-02        10      24             14        9.84

A regional soil sampling program completed on a 500-metre-by-100-metre grid has defined a strong gold-in-soil anomaly at Tabakorole. The program was completed by BHP in the early 1990s. Since 2003, a total of 28,912 m of diamond, 31,943 m of RC, 6,577 m of auger and 60,676 m of air core drilling have reportedly been completed, in addition to 1,400 line-km of airborne geophysics. A more recent 14-hole RC infill drilling program (totalling 741 m) has reportedly confirmed the continuity and grade of oxide mineralization at Tabakorole, as projected from the deeper sulphide intersections.

Cautionary note regarding historical data

Readers are cautioned that the data on Lakanfla and Tabakorole, as referred to in this written disclosure, are historical exploration data that have not been verified by a qualified person. Not all historical samples are available and Altus does not have complete information on the quality assurance or quality control measures taken in connection with the historical exploration results, or other exploration or testing details regarding these results. There has been insufficient exploration to define a current resource and the company cautions that there is a risk further exploration will not result in the delineation of a current mineral resource. The historical data should therefore not be relied upon until the company can confirm them.

Qualified person

The technical disclosure in this regulatory announcement has been read and approved by Steven Poulton, chief executive of Altus. A graduate of the University of Southampton in geology (honours), Mr. Poulton also holds a master's degree from the Camborne School of Mines (Exeter University) in mining geology. He is a fellow of the Institute of Materials, Minerals and Mining and has over 20 years of experience in mineral exploration and is a qualified person under the AIM rules and National Instrument 43-101 (Standards of Disclosure of Mineral Projects) of the Canadian Securities Administrators.

About Altus Strategies PLC

Altus is a London-listed and Toronto-listed project and royalty generator in the mining sector, with a focus on Africa. Its team creates value by making mineral discoveries across multiple licences. The company enters joint ventures with respected groups and its partners earn interest in these discoveries by advancing them toward production. Project milestone payments the company receives are reinvested to extend its portfolio, accelerating its growth.

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