London-listed Acacia Mining will terminate its earn-in agreement with TSX-V- and FSE-listed Sarama Resources over the South Houndé project, in Burkina Faso.
Acacia chose to divest of the project as part of an ongoing review of its exploration portfolio, with the project considered to be noncore.
Sarama will regain 100% ownership of the project.
As part of the termination, it will pay Acacia $2-million in staged payments. Acacia is also entitled to a $2-million payment once commercial production at South Houndé starts and will retain a 1% to 2% net smelter return royalty, based on a sliding rate basis on gold price received and a capped gold production of one-million ounces.
Acacia will also be granted five-million warrants for common shares in Sarama, exercisable for five years.
The termination of the earn-in agreement is subject to definitive documentation being agreed to by April 30.
“This is a major step forward for both Sarama and the project as there has been very little meaningful work undertaken on the project over the last one-and-a-half years. Sarama can now look at combining the company’s ThreeBee project with the South Houndé project and start assessing possible development scenarios,” says Sarama president and CEO Andrew Dinning.
The company believes significant exploration potential remains on both the South Houndé and ThreeBee projects and the initial focus will be on a number of attractive oxide targets that have already been identified.