Gold explorer Vector Resources (ASX: VEC) emerged from a trading halt this morning with news it had secured an agreement to purchase a 60% stake in the Adidi-Kanga gold mine, which is part of the gold major AngloGold Ashanti’s former Mongbwalu gold project in the Democratic Republic of Congo (DRC).
Situated about 84km from the Ituri Province’s capital Bunia, the mine is accessible by road and air.
AngloGold owned the 5,033-square kilometre project between 2005 and 2013 where it advanced it to feasibility status and kicked-off initial mine construction activities.
The major gold play had also acquired about 70% of the requisite equipment necessary to develop the mine. The project was then placed on care and maintenance in 2013 while AngloGold concentrated on its US$2.5 billion Kibali gold operation before selling its stake in Adidi-Kanga to Fimosa in early 2015.
As part of its feasibility study, AngloGold had proved up indicated and inferred resources for the mine of 11.9 million tonnes grading 7.65 grams per tonne gold for 2.9 million ounces of the precious metal.
However, the estimate is based on the SAMREC code and not compliant with the JORC (2012) code.
Due diligence for the acquisition is underway, with Vector’s technical team carrying out a review of historical work at the project. This is expected to be finished by the end of next month.
Upon electing to proceed with the project, Vector anticipates a JORC-compliant resource will be released by the end of March and will include additional mineralised areas the company has identified.
Under the acquisition terms a joint venture vehicle will be created which includes Vector possessing the 60% interest, with Fimosa Capital owning 26.22% and Societe Minere de Kilo Moto retaining the remaining 13.78% interest.
To partially fund the acquisition, Vector has executed a three-year US$10 million debt facility with a United Kingdom-based investor. The facility is expected to also fund exploration and feasibility expenses.
Additionally, Vector has made a US$500,000 non-refundable payment to Fimosa, with further cash and share issue payments amounting to US$30 million due with each milestone.
Vector will also be responsible for financing and managing the project through to commissioning.
The joint venture vehicle is targeting the completion of a definitive feasibility study in 2018 to develop and commission Adidi-Kanga.
As well as Adidi-Kanga, Vector owns 70% of the Maniema gold project in the DRC where recent drilling returned thick high-grade gold intersections including 5.7m grading 8.74g/t gold and 21.7m grading 3.58g/t gold.
Shares in Vector soared 25% in early morning trade to sit at A$0.025.