Taung Gold International Ltd.'s TG BVI unit and its joint venture partner entered into a deal to establish a joint venture company in preparation for the bidding of a copper project in Pakistan, the company said June 12.

The joint venture partner is a construction and military engineering branch of the Pakistan Army.

TG BVI will initially own an 81.55% interest in the JV company, while the partner will hold the remaining 18.45% stake. The partner can also elect to increase its stake to 49% by subscribing for further shares in the JV company.

The JV structure requires TG BVI to make the relevant share contributions and arrange financing for the project, while the partner will help develop and submit the JV's business plan to relevant governmental and regulatory authorities.

Up to US$50 million in bank guarantees will be provided in favor of the partner for the performance of TG BVI's obligations under the JV agreement.

The new company's board will consist of seven directors, whereas TG BVI is entitled to appoint five and the partner is entitled to appoint the remaining two.

The JV will cease to exist if the companies fail to secure a mining lease for the project within six months from the joint venture agreement.

The project is located the northwest region of Chagai in Balochistan province and comprises mainly of an enriched copper sulfide ore body situated above a primary porphyry copper system.