Chalice Gold Mines Limited (TSX:CXN)(ASX:CHN) is pleased to announce that it has reached agreement with the Eritrean National Mining Corporation (“ENAMCO“) for ENAMCO’s acquisition of a 30% participating interest in Chalice’s Zara Gold Project in Eritrea, East Africa, paving the way for final permitting, financing and development of the Zara Gold Project.
The agreement covers the high-grade Koka Gold Deposit (“Koka”), as well as the Zara North, Central and South Exploration Licences (the “Zara Licences”) but excludes the Company’s 100% owned Mogoraib North and Hurum exploration licences. Koka is one of the highest grade undeveloped open pittable gold deposits in the world with Probable Mineral Reserves of 4.6 million tonnes grading 5.1g/t gold for 760,000 contained ounces of gold.
Chalice is currently drilling targets around the Koka deposit, targeting additions to its mineral resource and reserve inventory.
Terms of the Agreement:
ENAMCO has agreed to pay to Chalice US$32 million for a 30% participating interest in the Zara Licences which will be represented by an interest in the operating company, Zara Mining SC (“Zara”). Zara will own, develop and operate the Koka Gold Mine, and will own and explore the surrounding Zara Licences.
In addition to this amount, ENAMCO will pay Chalice approximately US$2 million (subject to audit), which represents a reimbursement to Chalice of ENAMCO’s pro-rata share of exploration costs expended to date on the Zara Licences which fall outside of the Koka mining licence.
Payment will be made within six months of the signing of a shareholders’ agreement, which is expected to be completed shortly. Following completion of the agreement, the Zara Project’s ownership structure will be Chalice (60% participating interest) and ENAMCO (30% participating interest, 10% free carried interest).
Chalice and ENAMCO will contribute to the future development costs of Koka, and to future exploration expenditures on the Zara Licences, on a 2/3 and 1/3 basis, in line with their respective share of the overall participating interest.