RANDGOLD JV NEWS.....
12 June 1998
FARM-OUT OF MINERAL CONCESSION INTERESTS IN COTE D'IVOIRE
Occidental Gold (Ivory Coast) sarl, a wholly owned subsidiary of Leo Shield Exploration NL ("Leo Shield"), has entered into a farm-out/joint venture agreement with a subsidiary of Randgold Resources Limited ("Randgold") in relation to the Tengrela Est and Tengrela Sud concessions in northern C“te d'Ivoire. Randgold can earn a 51% interest by spending US$4,000,000 on exploration over 5 years, diluting Leo Shield to a 39% interest (before allowing for the Government's entitlement to a 10% interest at the mining stage).
The Tengrela Est and Tengrela Sud concessions are contiguous and are situated in northern C“te d'Ivoire close to the Mali border. They have a surface area of approximately 1,900 sq km and cover a strongly deformed Birimian greenstone belt intruded by granitoid bodies. A major structural feature considered to control Randgold's Syama gold mine, situated 20km north east of the Tengrela Est licence, is interpreted from regional airborne magnetic data to extend into the licence areas. Old gold workings can be found throughout the area and appear to be concentrated along the postulated trend of the Syama-Messini fault.
Upon Randgold earning its 51% interest, Leo Shield may elect to contribute pro-rata to future expenditure, or reduce to a 20% interest (after allowing for the Government's interest) free carried through to completion of a bankable feasibility study for a mineable resource of at least 1 million ounces of gold or gold equivalent. If Leo Shield elects to contribute when Randgold earns its 51% interest normal joint venture dilution provisions will apply if a party does not maintain its share of contributions. Leo Shield will withdraw from the Joint Venture but will retain a 3% net profit interest in the concessions if its interest dilutes to 5%.
Randgold must expend a minimum of US$500,000 within the first 12 months and must have cumulative expenditure of US$1,000,000 by the end of year 2, US$1,500,000 by year 3, US$2,500,000 by year 4 and US$4,000,000 by year 5 to maintain its right to participate in the Joint Venture. Randgold may withdraw from the agreement at any time after spending US$500,000 provided that the Government's minimum expenditure requirements have been met on a pro rata basis up to the time of withdrawal.
Leo Shield's equity in the concessions after allowing for the Government's right to a 10% interest in a mining project is:
Current 80.0%
On Randgold spending US$4,000,000 35.1%
At completion of a bankable feasibility study if
Leo Shield elects to be free carried to that stage 20.0%
The arrangements with Leo Shield's existing joint venture partner are unaffected by the agreement with Randgold. Leo Shield and Randgold will fund expenditure on behalf of the 10% minority partner and the Government in proportion to their respective equities from the time that Leo Shield elects to commence contributing. |
