Monteray to acquire Burkina Faso gold project

THE BOURSE WHISPERER: Surfers Paradise-based Monteray Mining Group has stepped outside its Western Australian focus by entering into a binding acquisition agreement to acquire a package of three gold licenses in Burkina Faso.

The licences are subject to the grant of permit applications covering 416 square kilometres of highly prospective ground in central western Burkina Faso, West Africa, covering the western extremity of the Houndé greenstone belt abutting the Taoudéni Basin.

The agreement allows Monteray to acquire Vema Resources, which has made an application for the licenses through a Burkinabe nominee entity.

Completion of the deal is subject to due diligence by Monteray, the Licences being granted to Vema and the approval of Monteray’s shareholders.

Monteray said in an announcement that it believes the licenses offer the company a significant opportunity to build its gold exploration portfolio as no systematic exploration has been undertaken on the area covered by Vema’s licenses.

“The company’s confidence is partly underpinned by the exploration success already recorded in the region, which includes the Mana Mine operated by Mana Minerals SA, a subsidiary of (TSX-listed) SEMAFO,” the company said.

“Mana, which is located approximately 45 kilometres south-south-west of the Vema applications, has reported Resources and Reserves of 3.28 million ounces and is currently producing at the rate of 180,000 ounces a year.”

Monteray Mining Group director John Hannaford said the licenses offered the company substantial upside and leverage.

“This is an attractive opportunity for a small tightly held company, to gain exposure to a large area of untested ground in such a high quality exploration location,” Hannaford said in an announcement.

Hannaford went on to say Monteray expected the acquisition to be the next stage in establishing a quality portfolio of gold projects in highly prospective areas.

The Agreement to acquire Vema provides for:

– A 45-day exclusivity period to conduct due diligence enquiries; and

– Consideration of 
    – $80,000 cash; 
    – 2.85 million Monteray shares; 
    – One million Monteray options exercisable at 30 cents within three years; 
    – One million Monteray options exercisable at 40 cents within four years; 
    – One million performance shares convertible to ordinary shares upon Monteray achieving a JORC Indicated Resource of greater than 500,000 ounces of gold of greater than 1.5 grams per tonne gold; and
    – One million performance shares convertible to ordinary shares upon Monteray achieving a JORC Indicated Resource of greater than 1,000,000 ounces of gold of greater than 1.5 grams per tonne gold.