Avocet Mining Plc said Oct. 10 that it entered into a conditional joint venture agreement covering the Tri-K gold project in Guinea.

Under the terms, a unit of Managem SA will acquire up to a 70% stake by completing a work program and meeting certain milestones.

Managem will spend a minimum US$14.0 million, US$4 million of which will paid to Avocet in cash while the remaining will be earmarked on a works program at the project. Avocet plans to use the US$4 million payment for debt repayment and general working capital.

Managem must also deliver a bankable feasibility study for a carbon-in-leach operation at the site, with an ore reserve of at least 1 million ounces, within two years.

Should the ore reserve be less than 1 million ounces, Managem's ownership will be limited to 60%.

Avocet retains the option to repurchase from Managem its equity and intragroup loans associated with the project and resume full ownership in case the work program is not completed.

"Completing this transaction will also herald a major milestone in Avocet's turnaround strategy with one of its three primary assets now having a clear development route to production at Tri-K and we look forward to working closely with Managem to achieving this medium term goal by 2020," Avocet CEO David Cather said in the statement.