Dual AIM/TSX-listed West Africa focused gold mining company Cluff Gold has entered into what it described as a “legally binding, conditional sale and purchase agreement” (the “Agreement”) with Orezone Gold Corporation (“Orezone”) for the acquisition of the licences and associated property comprising Orezone’s Sega Gold Project (“Sega”), located approximately 20km by road from Cluff Gold’s Kalsaka project in Burkina Faso.
The acquisition of the Sega project brings Cluff Gold a significant increase in oxide and transitional resources which the gold miner said is “suitable” for processing at Kalsaka, in addition to the anticipated resource increases which may result from the ongoing exploration programme at Kalsaka and Yako and the programme commenced by
Orezone at Sega.
The project hosts current NI 43-101 compliant Indicated Mineral Resources totalling 450,366oz (8.3Mt at 1.69 g/t) and Inferred Resources totalling 147,344oz (2.9Mt at 1.58g/t).
Acquisition bill will be financed from Cluff Gold’s existing cash resources which, as at 31 December 2011 was indicated at US$28.9 million.
The Consideration comprises 11 million new Cluff Gold ordinary shares and US$15 million cash.
In addition to the Acquisition consideration, Cluff Gold will also be responsible for the costs of the 10,000m drilling programme currently ongoing at Sega, budgeted at approximately US$800,000.
However the completion of the deal remains conditional on standard closing conditions including the approval of the Government of Burkina Faso
Cluff Gold intends to commence a Preliminary Economic Assessment immediately to confirm the “feasibility” of an operation whereby ore would be trucked from Sega to Kalsaka and processed at the Kalsaka plant, at a throughput in line with the existing operation at Kalsaka of approximately 1.6Mtpa.
Preliminary analysis suggests that capital costs associated with the commencement of production from the newly acquired resources at Sega would be approximately US$8 million, including the cost of additional crushing capacity, new leach pads, site civil works, road upgrade works and fleet mobilisation costs.
Commenting on the new acquisition Peter Spivey, Chief Executive of Cluff Gold said “Sega gives Cluff Gold the opportunity to significantly increase the Kalsaka mine life with limited upfront expenditure, and enhances the potential for our Burkina Faso operations to continue to provide significant cash flow through the development and early production from our flagship development asset, Baomahun in Sierra Leone. This transaction brings us closer to establishing Cluff Gold as a leading West African focused gold producer.”
“This transaction adds significant value for both Orezone and Cluff Gold and will provide more immediate cash flow for the government of Burkina Faso. The sale provides Orezone with a significant non-dilutive financing to advance the development of its Bombore gold project while still allowing the opportunity to participate in the upside at Sega through an equity interest in Cluff Gold.” Ron Little, CEO of Orezone, commented.
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