Lakota, Gold Fields strike deal

South African mining house Gold Fields (GFI-N) has taken an option on the land package recently consolidated by Lakota Resources (YLA-V) in the Lake Victoria gold district of Tanzania.

Under the terms of the deal, Gold Fields will subscribe for a private placement of 215,000 Lakota shares at $4.65, with the same number of purchase warrants exercisable for two years, at $5 in the first year and $5.50 in the second.

The $800,000 placement will be used by Lakota to fund exploration of the property. It gives Gold Fields the exclusive option to earn a 51% interest in the property by funding US$3 million of exploration work, to be managed by Lakota. The option must be exercised within 15 months of the closing of the private placement.

After earning in, Gold Fields can increase its interest to 70% by completing a bankable feasibility study on the project or by spending a minimum of US$10 million on feasibility work. Once Gold Fields has earned that interest, Lakota must contribute a 30% share on further expenditures, and either party has the option to allow its interest to be diluted to a minimum of 10%. At dilution below 10%, the working interest converts to a 2% net smelter return royalty.

Gold Fields’ offer is conditional on a satisfactory pre-closing investigation of the property, and the option deal requires the approval of the TSX Venture Exchange and the South African Reserve Bank.

Lakota has re-christened the land package, which includes the Ikina Reefs, Bemuda and Tannor properties, the “Tembo Project.” The property covers an 89-sq.-km area northwest of the Bulyanhulu gold deposit, currently being mined by Barrick Gold (ABX-T). Ikina Reefs, adjoining Bulyanhulu, covers the northwestern strike extension of the Bulyanhulu host structure and is the location of a large number of artisanal gold-mining pits.

Elsewhere in the Lake Victoria camp, Barrick and Minires du Nord (MDN-T) have started a new drilling program at the Tulawaka gold deposit, 120 km west of Bulyanhulu. About 4,500 metres of drilling will be done on the deposit’s West zone, where drilling in 2002 defined a mineralized zone about 20 metres thick with a strike length of 400 metres.

Feasibility work continues on the East zone at Tulawaka, where crews have outlined an indicated resource of 2.3 million tonnes grading 11.1 grams gold per tonne.

Lakota has signed deals to acquire 10 more prospecting licences, in the Kahama, Musoma, Geita and Nyachunga areas. The deals will close once satisfactory due diligence investigations have been carried out.