EcoGraf signs farm-in deal with AngloGold Ashanti at Golden Eagle project

EcoGraf (ASX: EGR) and AngloGold Ashanti Holdings have signed a $13.5 million farm-in agreement for gold exploration at the Golden Eagle project in Tanzania owned by EcoGraf subsidiary Innogy.

Under the terms of the deal, AngloGold Ashanti Holdings – a subsidiary of global mining company AngloGold Ashanti Plc – has the right to earn 70% equity in Golden Eagle’s prospecting licences by spending approximately $13.4 million on exploration over five years.

AngloGold will pay Innogy approximately $150,000 once the two licences – which cover an area of 578 square kilometres – have been granted by the Tanzania Mining Commission.

Opt-out available

AngloGold may withdraw from the farm-in after meeting the minimum exploration expenditure of $1.36m over the first two years.

If this occurs, AngloGold will be required to return all exploration data and samples generated during the farm-in period to EcoGraf.

Once AngloGold has earned its maximum equity, EcoGraf will have the option to contribute in order to maintain its 30% interest or dilute to a gross revenue royalty.

If it chooses to dilute, AngloGold will be solely responsible for taking Golden Eagle through to production.

Quality project

EcoGraf managing director Andrew Spinks said the farm-in agreement reflects the quality of the Golden Eagle project.

“Securing a deal with the world’s fourth-largest gold miner demonstrates the strong technical quality of Innogy’s assets and is a further vote of confidence in the mining industry of Tanzania,” he said.

“We look forward to AngloGold’s skill in gold exploration being applied to this project as it hunts for another Tier-1 deposit to complement its existing Geita operation.”

Established presence

AngloGold owns and operates the Geita project, Tanzania’s largest gold mine at 9.9 million ounces.

Tanzania is Africa’s third-largest gold producer, with output generated largely from the Archean Lake Victoria goldfields discovered in 1906 and believed to host more than 70Moz of gold.

The Golden Eagle project forms part of AngloGold’s new portfolio as it restarts exploration in Tanzania.

World-class potential

Golden Eagle is considered to be a high-quality gold asset with significant potential for the discovery of a world-class, multi-million-ounce resource.

The project is located on the eastern margin of the Lake Victoria goldfields and is in the same structural corridor as the historic 3.4Moz Golden Pride mine that was operated by Resolute Mining (ASX: RSG).

The project covers the direct interpreted northeast continuation of a banded iron formation hosting the high-grade Winston gold deposit, which has previously returned drill intercepts of 16 metres at 55.23 grams per tonne gold from 116m.

Golden Eagle has been the subject of detailed technical and corporate due diligence by AngloGold since May last year.