The agreement provides for termination of a 2014 earn-in agreement between the two companies.
Sarama will benefit from about US$13 million of historical exploration expenditure by Acacia on the project and significant exploration potential remains on the South Hounde and ThreeBee projects with the focus being oxide targets.
The South Hounde project adjoins the company’s ThreeBee project.
“Pleased to have executed agreement”
Sarama president and CEO Andrew Dinning said: “We are very pleased to have executed the agreement to finalise Acacia’s exit from the South Hounde project and look forward to resuming full ownership and management.
“Acacia’s exit is fundamental to consolidating our regional position and allows us to finally start advancing our key assets up the value curve and towards mine development.
“Sarama looks forward to recommencing management of the project and will initially focus on resource development work, which includes drilling attractive near-field and extensional oxide and free milling targets, whilst framing-up potential development options for the project.”
Key commercial terms
The company will make cash payments to Acacia according to the following schedule:
- US$500,000 on the termination date;
- US$750,000 at 6 months after the termination date;
- US$500,000 at 12 months after the termination date; and
- US$250,000 on satisfaction of certain conditions relating to the issuance of exploration permits.
Sarama will grant Acacia the right to commercial production-based payments consisting of:
- US$1 million on production of 10,000 ounces of gold;
- US$1 million on production of a further 5,000 ounces of gold; and
- Royalty payments capped at gold production of 1 million ounces.