Angkor Gold Corp has entered into a definitive joint-venture agreement with Mesco Gold (Cambodia) Ltd regarding its Oyadao North Concession in Ratanakiri Province, Cambodia.
The new agreement is the second between Angkor and Mesco. It expands mineral rights for Mesco; revises an already existing net smelter royalty (NSR) that Angkor holds on Mesco’s Phum Syarung Gold Mine; and allows Angkor to focus on its core prospects.
The JV agreement adds to Mesco’s current land holdings in the region which includes the soon-to-be-operating Phum Syarung Gold Mine that is scheduled to begin mining this year.
“Mesco is very close to receiving final approval for their operations at Phum Syarung Gold Mine and this deal enhances their ability to continue to explore and expand their operations well into the future, which bodes well for all parties involved,” said Angkor Gold’s CEO Mike Weeks.
Mesco is incorporated under the laws of the Kingdom of Cambodia and is affiliated with Mesco Steel Ltd, a leading vertically-integrated iron and steel producer based in India that has successfully diversified its operations into other raw materials and commodities, including mining.
The JV agreement on the Oyadao North Concession provides Mesco with the rights to explore the entire licence for minerals and, if deemed warranted, bringing a portion into commercial production by establishing and operating a mine.
Mesco agrees to spend US$1.25 million on exploration.
Angkor will maintain a 15% free-carried interest on the Oyadao North licence without incurring any financial obligations related to the maintenance of the licence and future exploration/mining programs.
Under the agreement, Angkor and Mesco have renegotiated the existing NSR agreement on the Phum Syarung mine such that the new NSR for gold will be at 2.0% while the price of gold is less than US$1000 and will increase 0.25% for every $50 that the gold price exceeds $1000 to a maximum of 7.5%. For all other minerals, a 7.5% NSR will be paid.
“Angkor will focus on its core prospects - Halo, Okalla West, Koan Nheak and CW - for the current work season, and the JV agreement ensures that the Oyadao North licence continues to be explored by a world-class team,” said Angkor’s vice-president of operations John-Paul Dau.
“Our business model for Cambodia continues to be based on the identification and development of mineable assets through joint ventures agreements with a strong NSR and carried interest attached. This transaction furthers those plans towards building long-term shareholder value,” he said.