Aim-listed gold and nickel explorer and developer Katoro Gold has entered into a joint venture (JV) agreement with Lake Victoria Gold (LVG) to develop Katoro’s Tanzania-based Imweru gold project.

Under the terms of the agreement, LVG will earn up to an 80% interest in the project, with the remaining 20% to be held by Katoro as a carried interest, while LVG will be responsible for 100% of the JV funding requirements.

LVG will also be liable for all debt funding, while the JV will reimburse Katoro for previous expenditures totalling €792 000 on or before December 31, 2023.

Prior to this, Katoro reported that the Imweru project was disposed of through its sale to LVG in June 2020.

However, the administrative process to finalise registration of the sale transaction, and therefore trigger ongoing milestone payments due to Katoro, has been indefinitely delayed as a result of unforeseen statutory barriers related to the transfer of ownership at project level.

Katoro notes that this situation meant no definitive schedule date could be established for the transfer of ownership and the issue of the relevant milestone convertible loan notes.

As such, Katoro and LVG agreed to cancel the sales transaction and to enter into a JV instead.

Going forward, the JV will appoint a project manager to manage Imweru, while two directors will be nominated by LVG and one by Katoro to form the board of the JV entity.

Katoro CEO Louis Coetzee says the decision to cancel the sale of Imweru and to instead enter into a JV, was a strategic decision by the Katoro board to address challenges that made it impossible to complete the sale agreement within an acceptable timeframe.

LVG is currently developing the Imwelo gold project, located adjacent to Imweru, and which is at an advanced stage of development towards first production.

“We believe the combination of the two projects will create a larger and significantly more economic project that will be able to attract suitable funding to accelerate the further development and exploitation of the combined gold mining project,” he says.