JOHANNESBURG (miningweekly.com) – LSE-listed Avocet Mining has entered into a conditional joint venture (JV) agreement for its Tri-K gold project in Guinea, that will see Moroccan mining group Managem eventually gain a majority interest in the project.

Initially, Managem will pay Avocet $4-million for a minority interest in the Tri-K project, after which it will work its way to a 70% stake on completion of an agreed minimum $10-million work programme, conditional upon certain milestones.

“We have been looking to raise financing for the Tri-K project for some time during a difficult period for the mining sector as a whole, as well as for Guinea in particular, including the ebola crisis, and we are, therefore, delighted to confirm that this project is now able to move forward,” Avocet CEO David Cather commented on Monday.

Following the initial $4-million cash payment by the end of 2016, Avocet will transfer the entity holding its interest in the Tri-K mining and exploration permits into JV Manacet, with the equity shared 60:40 between Avocet and Managem, along with the transfer of 40%, or around $14-million, of the intragroup loans associated with the project to Managem.

Managem will become the operator of the project.

The conditional deal requires Managem to complete a work programme, comprising drilling, analysis and documentation work, within 12 months, and deliver a bankable feasibility study (BFS) within 24 months for a carbon-in-leach operation at the site, with an ore reserve of at least one-million ounces. If these milestone are not reached, Managem's ownership will be limited to 60%.

Avocet would retain the option to repurchase its equity from Managem should the work programme not be completed, the company said in an update to shareholders.

“Once the BFS has been completed, both parties will work together to secure the financing for the construction project which, under the terms of the Mining Convention, must be completed, and production commenced, within 42 months of the date of ratification of the Mining Convention by the Guinean Parliament,” it continued.

Tri-K currently has a measured and indicated gold mineral resource of two-million ounces and an inferred gold mineral resource of one-million ounces.