Alecto Minerals secures partners for Zambia gold project

JOHANNESBURG (miningweekly.com) – Gold and base metals exploration and development company Alecto Minerals has signed an agreement with Chinese mining equipment manufacturer Yantai Xinhai Machinery and South Africa-based turnkey solutions provider PenMin for the proposed construction and financing of mining operations at Alecto’s Matala gold project, in Zambia.

This followed the positive outcome of a feasibility study (FS) for the project.
 
PenMin had delivered the FS, which demonstrated positive economics for a 400 000 t/y oxide and transitional openpit operation with a mine life of about four years and eight months, at $1 200/oz of gold, with exploration upside and underground potential.

The estimated capital cost for the plant and infrastructure was $14.4-million, while the project’s net present value stood at $28.6-million at an 8% discounted rate.

The parties had signed an agreement to enter into a proposed design, build and operate (DBO) contract under International Federation of Consulting Engineers (Fidic) ‘Gold Book’, 2008, standards for the process plant and associated infrastructure.

Xinhai had agreed to arrange vendor financing for the DBO contract.
 
PenMin would be appointed as the employer’s representative under a Fidic ‘White Book’ client / consultant agreement.
 
During the operational phase, Xinhai and PenMin would jointly manage the plant’s operations, the control of which would be transferred to Alecto on conclusion of the term of the contract.
 
Proposed vendor financing would be by way of a loan, allowing Alecto to remain the sole owner of the project. Financing, asset procurement and operating agreements remained subject to agreement on pricing and detailed contractual terms.
 
Alecto CEO Mark Jones noted that the signing of the agreement and Xinhai’s commitment to arrange vendor finance significantly de-risked the Matala project and was “testament to the excellent opportunity that the project represents for stakeholders”.

He added that PenMin and Xinhai had provided confidence for all parties to successfully deliver the development and operational phases of the project.

“There remains a lot of hard work to be done before we can commence development on the ground, but considering how far we have come since the acquisition was completed just five months ago, I am confident that we will deliver further progress in the months ahead.”