Gold and base metals exploration and development company Alecto Minerals earlier this month signed an agreement with Chinese mining equipment manufacturer Yantai Xinhai Machinery and South Africa-based turnkey solutions provider PenMin for the proposed construction and financing of mining operations at Alecto’s Matala gold project, in Zambia.

This follows the positive outcome of a feasibility study (FS) for the project.
PenMin has delivered the FS, which demon-strates positive economics for a 400 000 t/y oxide and transitional openpit operation with a mine life of about four years and eight months, at $1 200/oz of gold, with exploration upside and underground potential.

The estimated capital cost for the plant and infrastructure is $14.4-million, while the project’s net present value stands at $28.6-million at an 8% discounted rate.

The parties have signed an agreement to enter into a proposed design, build and operate (DBO) contract under International Federation of Consulting Engineers (Fidic) ‘Gold Book’, 2008, standards for the process plant and associated infrastructure.

Xinhai has agreed to arrange vendor financing for the DBO contract.

PenMin will be appointed the employer’s representative under a Fidic ‘White Book’ client/consultant agreement.
During the operational phase, Xinhai and PenMin will jointly manage the plant’s operations, the control of which will be transferred to Alecto on conclusion of the term of the contract.
Proposed vendor financing will be by way of a loan, allowing Alecto to remain the sole owner of the project. Financing, asset procurement and operating agreements remain subject to agreement on pricing and detailed contractual terms.

Alecto CEO Mark Jones notes that the signing of the agreement and Xinhai’s commitment to arrange vendor finance significantly derisked the Matala project and is “testament to the excellent opportunity that the project represents for stakeholders”.

He adds that PenMin and Xinhai have provided confidence for all parties to successfully deliver the development and operational phases of the project.

“There remains a lot of hard work to be done before we can commence development on the ground, but, considering how far we have come since the acquisition was completed just five months ago, I am confident that we will deliver further progress in the months ahead.”