Asante Gold Corporation (CSE:ASE) it is closing the acquisition of the Kubi mining leases in Ghana.
Following on from an option deal, agreed early last year, the Canadian company will now take ownership of the project as a result of its arrangement with Goknet Mining Company.
It gives Asante prime gold real estate in the vicinity of AngloGold Ashanti’s Obuasi mine, which has been host to some 66mln ounces of gold resources.
Kubi already hosted some 233,000 ounces of gold resources when Asante agreed the option with Goknet, and given its proximity to infrastructure the project is deemed to have potential for some near-term development.
Douglas MacQuarrie, in a statement, highlighted that Kubi is being acquired for the equivalent of US$18mln (or US$40mln per ounce of existing resources) and he described the deal as a “major step forward” for the company.
“Kubi has near term development potential, an excellent location and considerable grade and resource ounce upside. Share dilution has been minimized by using gold forward and NSR royalty payments,” MacQuarrie said.
Asante is issuing Goknet 7mln treasury shares, reserving some 8,000 ounces of gold for future delivery and grants the seller a 2% net smelter royalty (NSR) over future production.
The assets already carry a 3% NSR, held by Royal Gold Inc, and the Ghanaian government has a 10% carried interest in the project as well.
Additionally, Asante is also set to acquire further assets from Goknet, taking eight prospecting licences spanning over 300 square kilometres. The company highlighted that these licences have seen considerable exploration work and many already have drill-ready exploration targets outlined.
To acquire the additional areas, Asante will issue a maximum of 3mln further treasury shares to Goknet as well as a 2% NSR on each licence.
MacQuarrie added: “The addition of the southern half of Goknet’s highly prospective Ashanti II concessions to our current Betanase Option and Fahiakoba concessions give us exceptional discovery upside and growth opportunities.”
He told investors the immediate focus will now be to complete a financing that will allow the company to start driving decline at Kubi, as well as facilitate drilling for a resource-to reserve upgrade.
A capital injection would also fund an aggressive exploration programme on Asante’s other properties, MacQuarrie added.