Vector Resources Ltd. signed a heads of agreement for a new joint venture to develop the Adidi-Kanga gold mine, part of the Mongbwalu project in the Democratic Republic of the Congo.
The company, which will secure a 60% interest in the project, expects to finalize the agreement with Fimosa Capital Ltd. and Mongbwalu Gold Mines SA in January 2018.
The project is currently held by the Mongbwalu joint venture, which is 86.22% owned by Fimosa and 13.78% by Société Minière de Kilo Moto.
The joint venture will be established on Fimosa's 86.22% interest, according to the Dec. 21 release.
The joint venture company will complete a definitive feasibility study in 2018, focused on development start of gold mining at Adidi-Kanga.
The mine has an existing indicated and inferred mineral resource of 11.9 million tonnes at 7.65 g/t of gold for 2.9 million ounces.
As part of the agreement, US$20.0 million of Mongbwalu's existing debt will be refinanced and transferred to the new joint venture.
Vector will make staged payments totaling US$16.5 million in cash, issue US$15 million worth of shares and pay a 2.5% net smelter return royalty on gold sales to Fimosa.
The company can also choose to increase its interest in the project to 86.22% after the definitive feasibility study by purchasing Fimosa's 26.22% interest.
Additionally, Vector has secured debt funding of US$10 million to fund the acquisition costs and for working capital requirements.
The facility will have a 36-month term and accrue 6% annual interest.
The lender, Aggelos Capital Ltd., will have the right to purchase up to 15% of the company's gold sales from the Adidi-Kanga project.