Denver — Rio Tinto Mining & Exploration, a subsidiary of London-based
Rio Tinto can earn an initial 40% interest in the 216-sq.-km property by spending US$2.25 million on exploration over three years.
The major can boost its interest to 70% by incurring expenditures of US$6.75 million within five years. At that stage, Guyanor will have the right to maintain a 30% interest and fund its pro rata share of exploration funding, or exchange that right for a 10% carried interest and allow Rio Tinto to fund all costs through to commercial production. Rio Tinto would recoup its costs out of Guyanor’s share of cash flow.
Guyanor will manage the exploration during the first three years of the agreement, though Rio Tinto agreed to help fund the work through a US$1-million private placement. The major will purchase 500,000 shares of Golden Star priced at US$2 per share. The transaction is expected to close in mid-January.
Golden Star will then lend US$750,000 from proceeds to Guyanor for purposes of exploration; the remaining US$250,000 will be used to reorganize Guyanor. Golden Star owns a 73% interest in Guyanor.
The US$750,000 loan for exploration would be over and above Rio Tinto’s US$2.25-million commitment in the option agreement.
The property, situated in the northwestern corner of the country, contains a preliminary resource of 6.2 million tonnes grading 2.8 grams gold per tonne, or 550,000 oz. gold. Guyanor still retains as much as 100 sq. km of concession in the Paul Isnard property, and that land package is not part of the Rio Tinto agreement.
The first year’s exploration program will focus on the Montagne d’Or target, which Guyanor believes might have potential for hosting volcanogenic massive sulphide deposits.
Rio Tinto and Guyanor also have an agreement on the Dachine diamond property in French Guiana. The major can earn a 70% interest in the property by spending US$17 million over seven years.
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