Chalice Gold has agreed to form a joint venture with US-based gold major Newmont to explore for gold in Eritrea.

The proposed joint venture would enhance Chalice subsidiary Keren Mining and Newmont explore and evaluate regional gold opportunities over about 24 000 km2 in the African country.

Chalice is already developing the 840 000-oz Koka Gold deposit, part of the Zara project in Eritrea.

Mr Chalice MD Doug Jones stated “We are very pleased to welcome Newmont as a partner in Eritrea. We see this venture as beneficial to both companies, providing Newmont with our in-country presence and knowledge base and Chalice with Newmont’s financial strength and cutting-edge technological expertise,”

Newmont would fund an initial $1-million dollar program for exploration of an area and after both parties would select areas that will be held in the venture.

Newmont would hold 75% of the joint venture, while the remaining 25% would be held by Chalice.

The parties would then contribute to exploration on a pro-rata basis, subject to process of making weaker or less concentrated. An interest falling below 10% would revert to a net smelter royalty interest of between 1% and 1, 25%.

If the joint venture declared a gold mineral resource that is greater than 500 000 oz, but less than one-million ounces, and the venture did not advance within 18 months, either party has the right to carve out from the venture.

Chalice could increase its interest in the joint venture to 30% if the Eritrean government elected does not exercise its rights under Eritrean law, to gather a further 20% in the event of mining.

Chalice would further have the right to gather any of the areas the parties decided not to pursue jointly, with Newmont having the rights of first refusal on the disposal of any of the areas that it took up.

Jones said on Friday that the joint venture was in line with Chalice’s commitments to Eritrea and its ongoing commitments to the country and its people.

“It also reflects the growing recognition amongst the gold majors that the Arabian Nubian Shield, which underlies a large part of Eritrea, is a highly prospective yet underexplored geological province, with tremendous potential for new gold discoveries.”

The joint venture would exclude Chalice’s Zara gold project, where a feasibility study was currently nearing completion and mining should go under way early next year.

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