Investment company Papillon Holdings has signed a binding head of agreement for the reverse takeover of Mayflower Capital Investments, which holds rights over Aim-listed gold producer Goldplat’s Kilimapesa project, in Kenya, and a 70% interest in the Kakamoeka gold project, in Congo-Brazzaville.

Goldplat subsidiary Gold Mineral Resources (GMR) in July conditionally agreed to sell Kilimapesa to Mayflower for an initial consideration of $1.5-million in shares.

Mayflower has paid a $50 000 exclusivity fee under the binding term sheet and has a team on site in Kenya to progress the transaction.

The terms of the agreement between GMR and Mayflower remain unchanged, and the agreement is subject to a number of conditions precedent including the due diligence to be conducted, the receipt of all necessary approvals, and the finalisation of formal agreements.

Papillon will also need to raise equity of about $4-million.

GMR has previously announced its intention to sell 100% of the share capital of the Kilimapesa gold project, which owns the assets and licences of the Kenyan underground mining operation.

Mayflower has separately entered into an agreement under which it will assign its rights and obligations under the term sheet to a company listed on the LSE, which will, subject to the appropriate regulatory and shareholder approvals, seek to complete the acquisition and raise a minimum $4-million of funding for the development of Kilimapesa's operations.

Meanwhile, Papillon, which has applied for re-admission to the LSE, has said the acquisition of the Kilimapesa and Kakamoeka projects will provide it with near-term gold production at Kilimapesa and exploration and development potential at Kakamoeka.

It notes that these acquisitions form part of the first phase of a strategy to establish a portfolio of gold producing assets in Africa.

"Securing a near-term gold asset, which requires limited capital expenditure to bring to fruition, and which is partnered with significant upside from resource expansion and mine optimisation activities, is a remarkable find for our investors. 

"When coupled with an additional highly prospective and potentially equally valuable suite of gold discoveries in Congo-Brazzaville, I believe we have a truly exceptional and largely de-risked opportunity for shareholders to gain exposure to the junior gold mining industry," comments Papillon CEO Charles Tatnall.

He adds that now is an opportune time to be developing gold mines.
 
"The gold price recently hit all times highs and, despite a perceived correction in recent weeks, many commentators remain bullish about a long-term and sustainable gold price holding above $2 000/oz," he says.