Aim-listed GoldStone Resources has entered into a joint venture (JV) agreement with LSE- and Nasdaq-listed Randgold Resources to explore and potentially develop the Sangola gold project, in Senegal.

The agreement would see Randgold funding all costs up to and including the completion of a prefeasibility study (PFS) indicating that the mining of at least one-million ounces of gold was feasible.

Randgold would own 51% of the JV, with GoldStone owning the balance. GoldStone would also be entitled to decide whether to contribute towards a feasibility study (FS) or to dilute its ownership percentage to 35%.

GoldStone CEO Jurie Wessels said he was delighted to have entered into the JV with Randgold, which he believed had an exceptional record of finding and developing gold projects in West Africa. 

“We are retaining a material interest in the project, while removing any funding requirement until the project has advanced significantly. We are looking forward to moving ahead at Sangola with our new partners," he commented.

The agreement determined that a committee comprising three representatives from Randgold and two from GoldStone would manage the project.

All exploration over the Sangola permit – funded by Randgold – would include the execution of at least 10 000 m of reverse circulation or equivalent drilling a year, until the completion of a PFS.

Subject to the PFS satisfying that the mining of one-million ounces of gold was feasible, GoldStone would have the option to maintain its 49% interest through funding its share of the costs of a FS. 

If, following completion of the FS, the decision was taken to develop a mine, GoldStone would have the right to retain its interest through funding its share of the costs.

If the PFS indicated that the mining of at least one-million ounces of gold would not be economically and commercially feasible, the JV would cease to have effect.

In addition, Randgold may terminate the JV at any time by giving GoldStone 90 days notice.

The 471 km² Sangola permit was located in the south-eastern corner of Senegal in a prolific gold province where more than 30-million ounces of gold had been discovered in the past ten years. 

The permit area was bisected by a major gold-bearing shear zone known as the Main Transcurrent Shear Zone, which was host to Randgold's three-million-ounce Massawa deposit, which lay 30 km towards the north-east of the licence area.