DeSoto Resources (ASX:DES) has executed a binding heads of agreement with Fortuna Mining (TSX:FVI) for a joint alliance across a prescribed area of interest in the Singuiri Basin in Guinea.
The agreement sees both parties creating an exploration alliance and structure by incorporating an Australian joint venture company (JVCo), as well as a wholly owned Guinean subsidiary.
The board of JVCo will comprise two directors from each company to transition into a formal joint venture upon agreement of a Go Projects.
Fortuna will be required to spend up to US$12.5 million ($18.95 million) across a three year period for an initial 70% stake in the joint venture, while DeSoto retains 30%.
Areas involved in this agreement does not include DeSoto’s wholly owned tenements, while still allowing the company to acquire projects outside of the area of interest within the Singuiri Basin.
DeSoto Managing Director Chris Swallow says the agreement represents a “significant strategic step” for the company’s expansion into Guinea.
“The structure provides our shareholders with further substantial exposure to a highly prospective region while ensuring that exploration expenditure is initially carried by our partner,” Swallow says.
“With a strong partner in Fortuna and a robust governance framework, this alliance creates a solid platform to deliver discovery success in one of West Africa’s premier gold provinces.”
Fortuna Senior Vice President Paul Weedon says the agreement follows on the company’s plans to grow its exploration footprint across the Birimian terrain of West Africa.
“The alliance with DeSoto provides an excellent opportunity to work with a highly credentialed technical team with extensive in-country experience and success in an underexplored and very prospective country, supporting our long-term organic growth strategy,” Weedon says.
Interests falling under a 10% stake will be converted into a 2% net smelter return royalty.
After establishing a technical committee and returning initial permit applications, the companies will progress field activities at the Go Projects.
DeSoto Resources is a gold explorer focused on developing its portfolio of projects in Guinea’s Singuiri Basin.
Write to Maddison Elliott at Mining.com.au
Images: DeSoto Resources
