Tanzania's Acacia Mining (LON: ACA) has ended an earn-in agreement with Canada's Sarama Resources (CVE: SWA) over the South Hound?(C) gold project in Burkina Faso to focus on core projects.
Acacia and Sarama had originally agreed to a deal which could have seen the Tanzanian miner earn up to a 70% stake in South Hound?(C) after funding $14 million in exploration costs over a four-year period.
Acacia chose to divest of South Hound?(C) as part of an ongoing review of its exploration portfolio, to focus on core projects.By cancelling the deal, Sarama will be able to resume 100% ownership of the project, but will have to give Acacia up to $4 million in cash payments beginning with a $750,000 installment.
Sarama will also grant Acacia royalty payments on gold production capped at one million ounces of gold at rates of between 1% and 2% at a gold price of the same or less than $1,300/ounce and greater than $1,500/ounce respectively.
The Canadian junior will also grant Acacia warrants for common shares in Sarama, exercisable for five years and totalling five million units. Some 2.5 million warrants will be exercisable at C$0.10 per share and a further 2.5 million warrants exercisable at C$0.20 per share.
"Acacia's divestment of South Hound?(C) fits with the company's strategy of divesting certain non-core assets as part of an ongoing review of its exploration portfolio," the company said in the statement."Acacia remains committed to exploration in Burkina Faso with various earn-in agreements still active and which provide exposure to approximately 2,000 square kilometres of the prospective Hound?(C) Belt."
The earn-in termination is expected to be finalised at the end of April 2019.
Acacia, 63.9%-owned by Barrick Gold (TSX, NYSE:ABX) owns and operates Tanzania's three major mines - Bulyanhulu, Buzwagi and North Mara.
Shares in the company were up 1.16% in London to 183.30p by 12:13 p.m. local time.