JOHANNESBURG (miningweekly.com) – Diversified junior Cleveland Mining has signed a toll treatment agreement with fellow-listed Orinoco Gold under which it would process gold-bearing material from Orinoco’s Brazilian projects at its Premier gold mine.

Cleveland MD David Mendelawitz said on Friday that the agreement potentially provided the company access to another source of high-grade gold mineralisation, while providing Orinoco with a deeper understanding of their mineralisation and the potential for early-stage revenue.

“This is a great outcome for both companies. Limited bulk sampling has shown that Orinoco’s Goias projects have potential to host significant gold grades; however, their gold bearing mineralisation is nugget and difficult to quantify without extensive bulk processing,” Mendelawitz said.

An initial 500 t parcel would be processed in the first quarter of next year, allowing both parties to assess the processes, outcomes and economics of the activity.

Should the outcomes of the initial parcel prove positive, the agreement provided for further parcels of up to 4 000 t/m to be processed on a participation interest basis, where both parties share the gold production based on an agreed formula.

“Cleveland’s Premier mine is located within trucking distance of Orinoco’s projects, allowing us to sign a truly win-win agreement. Cleveland gains the potential to add additional cash flow and access another source of high-grade gold-bearing material without altering the Premier mine plan, while Orinoco can process their material, understand its prospectivity and potentially establish both an orebody and cash flows that would be otherwise impossible for an early-stage explorer,” said Mendelawitz.

Orinoco MD Mark Papendieck said the company was pleased to have finalised the agreement with Cleveland, saying it would enable the junior to fast-track its understanding of its projects.

“This, in turn, will enable us to evaluate the economics of future commercial gold operations at Cascavel,” he added.