Aviva Agrees Kenya Gold Deal With Lonmin's AfriOre

| Monday March 29, 2010 00:00

Aviva CEO Lindsay Reed said on Friday that the West Kenya project would be a key focus for the company.AfriOre is a wholly-owned subsidiary of South Africa-focused platinum-miner Lonmin.

To earn a 51 percent stake, the Perth-based Aviva would need to spend $3-million over a three-year period. It could then increase its interest to 75 percent by completing a prefeasibility study (PFS), which should demonstrate a pre-tax net present value of not less than $50-million.

Once Aviva has completed the PFS, Lonmin could elect to either participate at its 25 percent interest, or request the ASX-listed company to purchase the stake for cash.

The West Kenya project comprises two contiguous licences covering 2 800 km2 of the highly prospective Kakamega Greenstone belt in Kenya, part of the Tanzanian Archaean Craton.

Previous exploration has identified significant potential for gold, as well as copper, lead and zinc.''The project includes a large and prospective landholding, with relatively low expenditure commitments and annual licence fees,' Reed said.

Aviva was proposing an exploration programme that would include airborne geophysics, regional mapping and structural modelLing and a drilling programme targeting both gold and base metals, he reported.

''The project has significant gold potential, with more than 200 known gold occurrences within the license areas, and positive results from the limited drilling by AfriOre,' Reed said.

The project boasts high-grade base metal targets, which includes the advanced Bumbo deposit, where there is an exploration target of between one-million tons and 1,5-million tons at a grading of 11 percent zinc, 3,5 percent copper, 1 g/t gold and 40 g/t silver.

Aviva is also earning a 90 percent interest in the Mmamantswe coal project in Botswana.

Reed said that the project was well positioned to fuel an independent power project (IPP) being developed on the South African border.

Aviva has progressed resource development studies at Mmamantswe on the mine, including exploration, resource definition, coal preparation and mining studies and preliminary environmental approvals.

The energy project is on hold pending resolution of the regulatory framework in South Africa, which will enable purchase of electricity from IPPs. (Miningweekly)