Kopy Goldfields bringing GV Gold into Irkutsk region project
MOSCOW. Nov 25 (Interfax) - Sweden's Kopy Goldfields AB has signed a letter of intent to bring Russian gold producer GV Gold (OJSC Vysochaishy) into the Krasny Project in the Irkutsk region, Kopy Goldfields said in a press release.
The project hosts 1.37 Moz of inferred and indicated gold resources.
According to the letter of intent, GV Gold may earn up to a 51% interest in the Krasny Project by completing an in-fill exploration program followed by a reserve report in accordance with both the Russian GKZ classification and the international JORC standard. Dependent on the final details of the exploration program, the budget of the program is estimated up to $6 million and will be financed by GV Gold in full. The program will primarily target the part of the Krasny deposit which is closer to surface and limited to the depth of 190 meters. The exploration program will be developed in two stages and is scheduled to be completed within 14 months including the reserve reporting. During the exploration period, Kopy Goldfields will act as operator of the project.
The deal also includes an upfront cash payment of $1 million to Kopy Goldfields and the possibility of an additional consideration of $2 million subject to the results of the reserve reporting.
Kopy Goldfields said GV Gold had been reviewing the project since May 2013. The due diligence of the project is in an advanced stage and the final details of deal structure and of the exploration program will be agreed in parallel with the due diligence completion. The shareholders' agreement is expected to be signed shortly.
"This Letter of Intent is an important step to develop the Krasny-deposit into a mine, and we are pleased to get a full carry forward for the agreed work program. At the end of 2014 we will hopefully have proven gold reserves on Krasny to be further taken into solid gold production. This is in line with our strategy targeting to limit our own investments into explorations and to focus on developing projects with partners. We are also very pleased to partner up with one of Russia's largest and fast growing gold producers with extensive competence and experience of building and operating gold mines in the Lena Goldfields area," said Mikhail Damrin, CEO of Kopy Goldfields.
Headquartered in Stockholm, Kopy Goldfields was set up in 2007. It holds licenses to the Kopylovskoye, Kavkaz, Prodolny, Krasny, Pravovesennyaya, Vostochnaya and Takhtykan gold fields in the Lenskaya gold province in the Bodaibo district of the Irkutsk region.
It is 22% owned by the Canadian gold miner Eldorado Gold.
On November 8, Kopy Goldfields inked an agreement of intent to sell the licenses to Kavkaz and Prodolny for around $1.5 million. The company has not said who the potential buyer might be.
The privately owned GV Gold was Russia's eighth biggest gold producer in 2012 with 168,000oz.