Alecto Minerals buys gold deposits in Zambia, announces placing

Africa-focused gold and base metal exploration and development company Alecto Minerals said it has acquired the Matala and Dunrobin gold mines in Zambia for an aggregate consideration of £1.54m, as it announced a £650,000 placing.

Alecto said the project has “excellent potential” to be developed into production in the near to mid-term, adding that the mines have, in aggregate, 760,000 ounces of gold at an average grade of 2.3 grams per tonne.

The AIM-listed company said the deal will be covered by the issue of 943.8m new shares, £100,000 in cash and £307,500 as a deferred consideration.

Net proceeds from the placing to raise £650,000 will be to fund the cash element of the acquisition, to advance Matala and the company's proposed JV projectt with Desert Gold in Mali and to provide near-term working capital.

Chief executive officer Mark Jones said: "In acquiring this project in the stable Southern African democracy of Zambia at low cost we have, once again, taken advantage of market conditions to de-risk our portfolio and deliver significant potential upside for all stakeholders going forward.

"As well as completing this transaction, our team has been actively concluding the business plan to re-open the project and begin producing gold profitably at current prices, thereby positioning Alecto positively in any prevailing market conditions."

At 0940 GMT, Alecto shares were down 33% to 0.08p.