TORONTO (miningweekly.com) – Canadian explorer and project developer MDN has announced that China-based Sichuan Xinye Investment Corporation of Mining and Exploration (Xinye) has decided to formalise the two partners’ relationship by establishing a joint venture (JV), including an acquisition option, on the Ikungu and Ikungu East properties, in Tanzania.
TSX-listed MDN stated that Xinye had decided to proceed with the JV after the expiration of a due diligence period, resulting in a payment of $200-million to MDN, as agreed to under a heads of agreement signed in September last year.
"We are pleased [by] Xinye’s decision. This demonstrates once again the quality of [the] Ikungu and Ikungu East assets. The cash transferred by Xinye will be used . . . to maintain our activities in Tanzania," stated MDN president and CEO Claude Dufresne.
Xinye is a subsidiary of Sichuan Bureau of Metallurgical Geology and Exploration – a Chinese State-owned company of about 6 500 employees. Its revenues of about $900-million mainly come from geotechnical engineering, exploration services and mining operations.
MDN plans to devote the coming weeks to conclude the definitive agreement. During this period, Xinye will have the option to acquire 100% of MDN's interests in the Tanzanian properties for the sum of $3-million and a royalty of $5/oz of gold produced.
After closing the definitive agreement, Xinye will be required to spend $2-million during the first phase of exploration work on the properties, lasting 18 months. This is expected to free 22% of the interests in the properties. Xinye will also maintain the option to acquire 100% of the interests during the first phase of exploration for $3.5-million, including a royalty of $5/oz of gold produced.
MDN advised that the agreement with Xinye implies a total investment of $7-million in exploration work on the properties over three phases. Over the course of the three phases, Xinye will always have the option to acquire a full interest in the properties by paying an amount ranging from $3.5-million to a maximum of $6-million. The sums invested by Xinye also include 10% for MDN for administration fees.
MDN holds 80% of the Ikungu and Ikungu East projects, while Tembo Gold holds the remaining interest. Gold mineralisation is associated with sulphides in grey quartz veins and altered assemblages, resulting in high-grade mineralised lenses. Small-scale historical mining production averaged 12.5 g/t gold between 1936 and 1952.
Further, MDN is actively developing the Crevier project, in which it holds a 72.5% stake. Crevier is a world-class niobium and tantalum resource, located in the Lac Saint-Jean region, in Quebec.