Luna Gold Corp. is pleased to announce that it has entered into an exploration agreement with AngloGold Ashanti Limited for the Company's greenfields mineral claims that surround its past-producing Aurizona Gold Mine in northern Brazil.
The terms of the agreement require AngloGold Ashanti to invest US$14 million in exploration expenditure over a four year period to earn a 70% interest in the mineral claims. The joint venture will not include mineral claims that correspond to the Aurizona Gold Mine, the nearby Tatajuba orebody extension and other brownfields properties, or the Touro greenfields property. Should AngloGold Ashanti not fund the US$14 million in exploration over the 4-year earn in period, then they will not receive any interest in the mineral claims.
Marc Leduc, President and CEO, stated, "We are very happy to have one of the largest gold producers in the world, AngloGold Ashanti, join us in this exploration project. This clearly demonstrates the outstanding geological potential of the greenfields claims. In the current difficult market of the gold industry, AngloGold Ashanti has committed a considerable amount of funds to our exploration areas and our prospective ground. We are happy to team up with AngloGold Ashanti who have considerable exploration experience in similar Precambrian geological terranes and an outstanding track record as one of the best mine operators in Brazil." He also added, "This exploration agreement will also allow Luna to focus on the redevelopment and restart of the Aurizona Gold Mine while maintaining a significant exploration program in the greenfields areas."
The agreement currently covers an area of 1,702 square kilometres, which may be increased to 2,387 square kilometres subject to governmental approvals on certain greenfields claims. AngloGold Ashanti is required to spend a minimum of US$2 million during the first year of the earn-in period, and can withdraw from the agreement at any time after spending US$2 million.
After expenditure of US$2 million in the first year of the agreement, AngloGold Ashanti can spend an additional US$12 million over the next three years to vest at 70% in the mineral claims. Following AngloGold Ashanti vesting, Luna will thereafter be obligated to fund future joint venture expenditures on a pro-rata basis. In the event Luna elects not to contribute its pro-rata share of future joint venture expenditures and its interest in the joint venture were to fall below 5%, Luna would be required to transfer its joint venture interest to AngloGold Ashanti in exchange for a 1% net smelter returns royalty ("NSR") on the greenfields properties. The joint venture agreement will provide AngloGold Ashanti with a one-time option to purchase the 1% NSR for US$8 million. If AngloGold Ashanti elects to sell its interest in the joint venture, Luna has the option to purchase AngloGold Ashanti's pro-rata interest in any gold resources identified in a National Instrument 43-101 compliant mineral resource estimate for US$10 per ounce.