Alecto Minerals in talks over Ethiopian JV with Centamin

The 945.5 sq km Wayu Boda project is located on the Adola Greenstone belt in southern Ethiopia

FTSE 250 mining giant Centamin (LON:CEY) is to pump £250,000 into the junior miner Alecto Minerals (LON:ALO) as a prelude to a potential joint venture between the two.

The two companies have entered into a non-binding heads of terms agreement to form a joint venture (JV) to pursue opportunities offered by certain mining projects identified by Alecto and Centamin within the Federal Democratic Republic of Ethiopia.

As part of the proposed deal, Centamin will invest £250,000 in Alecto by way of a share subscription at a price per share of 1.6p, a 74% premium to share price at close of business 28 May 2013.

Alecto currently holds two exploration licences in prospective greenstone belts of Ethiopia: Wayu Boda and Aysid Metekel.

Wayu Boda has already been identified as a JV project, with Centamin set to commit US$1.8mln initially to take a 51% interest in the project, with the option to commit a further US$6mln to take its stake up to 70%.
The alliance announcement said both companies will participate in selecting future targets through a joint venture committee, with those targets deemed to be joint venture projects.
The Aysid-Metekel project may be designated as a JV project, subject to further diligence by the JV committee. If the project is designated, it has been agreed that Centamin will commit US$1.2mln initially, with an option second phase commitment of US$5mln.
Alecto Minerals managing director Damian Conboy said: "This is a potentially transformative deal for Alecto that endorses the work we have completed and the quality of our portfolio in Ethiopia.
“If the JV agreement is signed, with Centamin's investment and technical input, we believe we can rapidly advance the Wayu Boda gold project, and potentially our Aysid Metekel project, to create value for our shareholders.”