Roscan bags Mali royalty sale deal with Osisko, shares up

Roscan Gold Corp. [ROSI-TSXV] has entered into a royalty financing agreement with Osisko Gold Royalties Ltd. (OR-TSX, OR-NYSE) that covers its Kandiole project in Mali, West Africa.

Under the deal, Osisko has initially acquired a 1.0% net smelter return royalty (NSR) for an upfront payment of $5 million. Osisko can acquire a second 1.0% NSR on the property at any time for an additional $5 million.

However, Roscan can compel Osisko to acquire the additional royalty in the event that Roscan receives a long-term exploitation license on the property from the Malian government.

Osisko has also been granted the right of first refusal on future royalties and streams related to the property, including in relation to the company’s outstanding buyback rights, should the company decide to sell those rights, and royalties on any future properties acquired or claimed by Roscan that are contiguous or complementary to the property.

Roscan shares advanced on the news, rising 2.4% or $0.005 to 21 cents on volume of 176,460. The shares are currently trading in a 52-week range of 42 cents and 14.5 cents.

Roscan has been working to assemble a sizeable land position in the Biriminian Rocks of West Mali, one of the most productive greenstone belts on the African continent. It signed option agreements with Touba Mining SARL, allowing Roscan to earn a 100% interest in the 56 square kilometre Kandiole-North permit and the 27-square kilometre Kandiole-West permit. It also has the option to acquire a 100% stake in the 16-square kilometre Mankouke permit. In addition, RosCan has an option to earn 100% interest in the 65 square kilometre Segando-South and 32 square kilometre Moussala North permits.

The Kandiole Project consists of approximately 271 square kilometres of contiguous land, comprised of five permits and is located east of B2Gold Corp.’s [BTO-TSX, BTG-NYSE] Fekola mine and Iamgold Corp.’s [IMG-TSX, IAG-NYSE] Boto and Diakha deposits.

 Last year, Roscan said it had made a major new gold discovery at the Walia target zone located on recently acquired ground adjoining its Kandiole project.

The company said its regional exploration program led to the discovery of a new mineralized trend that extends for an estimated 1,500 metres and returned high-grades of 21.4 g/t gold over 8.0 metres, including 77.8 g/t gold over 2.0 metres very close to surface. This new discovery is open in all directions.

Walia is one of the high priority targets located on the Dabia Sud Project, which covers 35 square kilometres of concessions that directly adjoin the Kandiole Property. Roscan picked up this ground by acquiring Komet Mali SARL, a wholly-owned subsidiary of Komet Resources Inc.

Dabia Sud contains the Kabaya deposit which is estimated to host a pit-constrained indicated resource of 105,000 ounces of gold, plus a further 35,000 ounces of inferred resources. The Kayaba historical estimate is based on optimized pit shells using a gold price of US$1,350 and a presumed heap leach gold recovery of saprolite material.