OreCorp Limited (ASX:ORR) has gained exposure to a...

OreCorp Limited (ASX:ORR) has gained exposure to a 4.2-million-ounce Tanzanian gold project via a joint venture deal with the world’s largest gold miner.

The JV and earn-in agreement will allow OreCorp to acquire up to 51% of the Nyanzaga project, currently controlled by Barrick Gold’s (NYSE:ABX) local operator Acacia Mining (LON:ACA).

Foreign resource estimates of Nyanzaga conducted so far have established an outcropping 4.2-million-ounce in-pit inventory in the indicated and inferred category at a grade of 1.3 grams per tonne.

The 300-square-kilometre project lies in the Lake Victoria Goldfields, where 45 million ounces of gold have been confirmed within a 100-kilometre radius and four large-scale gold mines are already in production.

Consideration for the acquisition of up to a 25% interest includes a US$1 million (A$1.4 million) upfront cash payment followed by staged earn-in expenditures and completion of a definitive feasibility study.

OreCorp may increase its stake to 51% by making cash and royalty payments up to a total of $15 million based on the achievement of defined project milestones.


Analysis

The Nyanzaga transaction is ideal for OreCorp in that it will allow the company to leverage its Africa-savvy management and depth of experience in Tanzania in particular. OreCorp leadership includes Africa mining veteran Craig Williams and Alastair Morrison, who served as resident exploration manager at the 7-million-ounce North Mara gold mine in Tanzania.

Nyanzaga stands to benefit from Tanzania’s status as an internationally respected mining jurisdiction and Africa’s third largest gold producer. The Tanzanian Ministry of Minerals has already confirmed in writing that it will support the JV to advance the project.

Although the resource is as-yet a non-JORC estimate, the currently robust projections suggest important mine potential as well as scope for scaling and options for various development strategies.

OreCorp is fully funded to develop the project to the prefeasibility stage, with existing cash reserves of $7.1 million as of the end of August.