A proposed strategic alliance in Burkina Faso will see Jilbey Gold Exploration (JLB-V) become High River Gold Mines‘ (HRG-T) exploration arm in the West African nation.
Under the deal, High River would transfer all its existing exploration properties in Burkina Faso to Jilbey, excluding those already covered by a Mining Investment Agreement with the government of Burkina Faso. Included are four new properties covering around 900 sq. km, all with trucking distance of High River’s planned mill at the Taparko gold project.
Two of the properties, Birgui-Nabingou and Bougou, host geochemical anomalies on favourable structural trends along the northwestern strike extension of the Taparko shear zone, which hosts the Taparko gold deposits. High River has already spent US$370,000 exploring the two, and Jilbey plans US$230,000 worth of rotary air blast (RAB) drilling to test anomalies about 20 km from the proposed Taparko mill cite later this month.
The agreement also calls for High River to help Jilbey acquire new exploration properties, but does allow the former to acquire advanced gold projects on its own.
High River can back into a 50% interest in any property hosting a new economic deposit within about 100 km of the Taparko mill. Outside that radius, Jilbey can develop the project on its own; High River retains a 30-day right of first refusal on any properties Jilbey decides to partner-up on.
Pending regulatory approval and a thumbs up from each companies’ board, a standard joint venture will be set up for the development of any significant gold deposit discovered within trucking distance of Taparko. High River will act as the operator during development and production. The tolling charge to process ore from such a discovery will be based on any expansion expenses High River might incur at the Taparko mill, plus the cost of processing.
High River, which already has a 10% stake in Jilbey, has further agreed to subscribe for 10%-15% of Jilbey’s future equity financings. High River will also contract its exploration team to Jilbey at cost.
High River and Jilbey currently control more than 5,300 sq. km of land in Burkina Faso. About two-thirds of that lies within trucking distance of the Taparko mill.
High River gave the go-ahead for development of the Taparko gold project in late October. Plans call for the construction of a mill and infrastructure capable of processing ore from both Taparko and Axmin‘s (AXM-V) Bouroum deposit, 49 km to the northwest.
The combined operation would run through a million tonnes of ore per year to produce around 680,000 oz. gold over a mine life of 7.5 years.
The latest deal spells out Jilbey’s rights of access to the mill.
High River owns 80% of Taparko; the Burkina government, 20% (5% of which is participating).
Shares in Jilbey were a penny higher at 47 in afternoon trading in Vancouver following the news on Feb. 18. High River’s shares were off 7 at $2.18 in Toronto.
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