West Africa-focused exploration company Golden Rim Resources (ASX: GMR) is set to acquire up to a 75% interest in the Kada gold project in Guinea after signing a binding agreement with sole owner Vetro Gold SARL and its Turkish shareholder Elta Madencilik Ticaret Anonim STI.
The agreement includes a four-month exclusivity period which will allow Golden Rim to carry out due diligence on the project previously explored by Newmont Mining Corporation.
In consideration for the exclusivity, Golden Rim will be required to pay a $420,000 fee in cash or shares.
Under the agreement terms, Golden Rim may acquire an initial 25% interest in Kada through the issue of $3.5 million of Golden Rim shares to Elta, which will trigger the formation of the Kada joint venture.
It may then elect to earn a further 26% interest by spending $5.6 million on exploration within 24 months, after which time it will hold 51% interest.
A final 24% interest will be achieved if Golden Rim elects to sole-fund a definitive feasibility study for the project.
The Kada project comprises the single Kada exploration permit which covers an area of 100 square kilometres in West Africa’s central Siguiri Basin, which forms part of the richly-mineralised Birimian gold belt containing metasediments with minor granitic rocks, metavolcanics and mafic to ultramafic intrusives.
The project lies 36km along strike from and to the south of the 10 million ounce Siguiri gold mine operated by AngloGold Ashanti (ASX: AGG).
Newmont’s extensive drilling programs at the project totalled 33,857m across 297 holes.
The most notable results were 27m at 4.4 grams per tonne gold from 96m, including 2m at 26.6g/t gold from 112m; and 4m at 28.9g/t gold from 20m, including 2m at 55.1g/t gold from 20m.
In 2012, Newmont calculated a non-JORC gold resource at Kada based on a lower grade, bulk tonnage, heap-leach operation, and subsequently determined the grade and recoveries were insufficient to proceed.
No significant work has been conducted on the project since then.
Contrary to Newmont’s assessment, Golden Rim believes Kada is better suited to more selective mining and a conventional gravity/carbon-in-leach processing plant.
Managing director Craig Mackay said the gold mineralisation is a “typical Birimian stacked vein system” similar to its 1.4Moz Kouri project in Burkina Faso, and expects to be able to quickly move it to maiden resource stage.
“Kada provides an exciting new opportunity for [us] in one of the most under-explored countries in West Africa,” he said.
“Broad open zones of gold mineralisation have already been identified and, with substantial historical drilling, we are aiming for a maiden JORC mineral resource in the near-term.”
Mr Mackay said there exists considerable exploration upside for Kada.
“The mineralisation in the Newmont gold resource area remains open along strike to the north and to the south and at depth, and little exploration has been conducted in this area below 100m,” he explained.
“Historic drilling only tested 3km of the main gold anomaly which strikes for 13.4km long and is 1km wide, and was focused beneath a duricrust plateau in the south where the Newmont resource is located.”
“The remainder of this anomaly remains untested.”
Golden Rim will prioritise follow-up exploration on an area south of the plateau where the anomaly lies, along the contact between the metasediments and monzogranite intrusion.
Soil sample results in this contact area have previously returned up to 2,265 parts per billion gold.
“At this stage, approximately 90% of the gold-in-soil anomalies at Kada – including sample sites which have returned values up to 22,470ppb gold (or 22.5g/t) – remain untested and around 25% of the project area has not been subject to any geochemical sampling,” Mr Mackay said.