Iamgold, Avnel sign option deal on Mali project

Staff Writer | Friday August 14, 2009 00:00

The project consists of an operating underground gold mine and an exploration property with a 30-year mining permit.

Avnel owns 80 percent of the project, with the Malian government holding the remaining 20 percent stake.

The option agreement allows Iamgold to earn an initial 51 percent interest in Avnel's share of the Kalana project by spending $11 million on exploration activities at the site over a three-year period and by meeting certain other requirements. Iamgold, which owns Mupane mine near Francistown has the option to increase its interest further upon delivering a feasibility study that supports the development of a gold mine at the exploration site.

The agreement with Iamgold will allow Avnel the opportunity to advance the Kalana project into a large-scale bulk mining operation. The Kalana gold mine produced about 4,700 ounces of gold in the first quarter.

In connection with the option agreement, Iamgold will pay Avnel $1 million in cash, and Avnel will issue Iamgold warrants to acquire up to 2 million of its common shares at an exercise price of 45 Canadian cents each.

'Kalana represents an outstanding opportunity for Iamgold to explore a strong gold mineralised system with the view of realising the large-scale, bulk mineable potential, Senior Vice President of Exploration at Iamgold Michael Donnelly said in a statement.
He said opportunities of this nature are few and far between and Kalana is a natural fit with Iamgold's long-term strategic objectives to develop a strong pipeline of projects in the gold miner's focus areas of West Africa, Quebec, and the Guiana Shield.

For his part, the CEO of Avnel, Howard Miller said the partnership leverages Avnel's considerable investment in the project to date and will benefit both the company's shareholders through Iamgold's extensive West African expertise.

'This agreement represents a significant milestone in the development of Kalana and fulfills our goal to advance the project into a large scale bulk mining operation, as well as further exploring the large geologically prospective Permit Area. We believe that working together, Iamgold and Avnel have the capability to fully explore the upside potential at Kalana,' Miller said.

Avnel is a gold mining producing company operating the Kalana Gold Mine and is engaged in the exploration of the Kalana Exploitation Permit and Fougadian exploration permit.
Iamgold is a mid-tier gold mining company producing approximately one million ounces from 7 mines on 3 continents.

They are focused on growth and have a pipeline of development and exploration projects including Molomolo areas near Mupane Mine.