Perth-based junior Middle Island Resources has entered into a heads of agreement with a subsidiary of TSX-listed Semafo to obtain a shareholding in the Samira Hill gold mine, in Niger.

Under the agreement, Middle Island would pay a cash sum of $1.25-million and a fixed net smelter return royalty of 1.2% on any gold sold from the Samira Hill plant in exchange for a full interest in African GeoMin Mining Development Corporation, which holds an 80% interest in the owner and operator of the Samira Hill gold mine.

The government of Niger holds the remain-ing interest in the project.

Middle Island MD Rick Yeates said last week the acquisition of the Samira Hill project was a transformational opportunity for the company and represented the final element of a long-held strategy to consolidate the entire Sirba greenstone belt around the Samira Hill gold plant.

“Although it represents an option on the gold price in the short term, this acquisition completes the remaining piece in Middle Island’s highly prospective Sirba project strategy, providing the opportunity to process all deposits identified by Middle Island and its partners within the project area itself, as well as the wider Sirba project, at a centrally located milling facility that is in sound working order.”

Yeates noted that the projected production from the project would be between 40 000 oz and 50 000 oz a year, over an initial three-year period.

“Based on existing reserves and resources, plus the likely addition of our own Tialkam South deposit, it is easy to envisage a possible mine life of at least eight years, with plenty of exploration upside throughout the enlarged Sirba project to provide further additions with time.”

The Tialkam South deposit, along with the K4/K5 prospect in neighbouring Burkina Faso, represented Middle Island’s two most advanced standalone gold resource targets.

The Samira Hill project included a two-million-tonne-a-year carbon-in-leach plant, power supply, a process water reservoir, a tailings dam, an experienced workforce and an ore reserve of some 7.9-million tonnes, grading 1.25 g/t gold.

The acquisition was subject to a number of conditions, including the completion of a A$5-million equity raising, the granting of substitute exploration permits to Middle Island and shareholder and regulatory approvals, along with the standard due diligence.