JOHANNESBURG (miningweekly.com) – Africa-focused gold and base metals developer Alecto has entered into an agreement to buy Luiri, which owns the 760 000 oz Matala and Dunrobin Gold Mines (the project), in Zambia, for £1.54-million.

Alecto would issue 943-million new ordinary shares with an aggregate value of £1.13-million, pay £100 000 in cash and £307 500 in deferred consideration to the vendors, C3W and CNG Trust.

Beside the existing mines, the project also held exploration targets, Chosa and Shadreck, within a single 32 km² large-scale 25-year renewable mining licence initially granted by the local Ministry of Mines in 2003 and reinstated in December 2014.

In addition, Luiri held rights to further gold exploration opportunities on a nearby licence covering 245 km².

Alecto conditionally raised £650 000 through a placing, with the net proceeds to be used to fund the cash element of the acquisition, to advance Matala and the company's proposed joint venture project with Desert Gold, in Mali.
 
Pursuant to the terms of the acquisition, Alecto has agreed to issue convertible loan notes amounting to $800 000 to C3W, in respect of an existing loan in Luiri due to C3W.
 
"The project has excellent potential to deliver production in the near to mid-term considering the presence of significant and advanced resources, the mining licence and associated environmental permit.

“An updated internal scoping study demonstrates the robust economics achievable through production even at today's depressed market prices, with low initial capital cost required to start generating cash flow. 

“The acquisition is the result of over a year of project assessments, which has seen our attention firmly focused on rationalising and monetising our existing portfolio, while pursuing opportunities to become a gold producer in the near to mid -term,” Alecto CEO Mark Jones commented.