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In order to segment its activities and unlock value for its shareholders, SearchGold has re-organized its diamond assets along with its AIM (MANA) and TSX-V (MNO) listed partner, Mano River Resources ("Mano"), to create an integrated diamond company.
In July 2005, the Company signed a strategic CAD 4,200,000 joint venture agreement with Managem on the 2,318 km² Bakoudou-Magnima Gold Project in Gabon which consists in the 24 km² Bakoudou exploitation permit and the 2,294 km² Magnima exploration permit.
The terms of the JV agreement are as follows: Managem can earn 54% of SearchGold's 90% initial interest through the execution of CAD 1,200,000 cash payment and work commitments of CAD 3,000,000 over a 2-year period; an additional 9% by completing a bankable feasibility study and an additional 4.5% by arranging, if requested by SearchGold, the financing through to production for SearchGold. Managem is the project operator and exploration and development programs are determined jointly by both SearchGold and Managem through a 4-member management committee composed of two members of each party.
Managem has now acquired a 54% in the project. Once the bankable feasibility study is finalized, Managem will have acquired an additional 9% to hold a 63% interest in the project. A remaining carried 10% interest is held in the project by a local partner.
In January 2006, SearchGold signed an option agreement to acquire a 100% interest in the 475 km² Mandiana Gold Property in Guinea through the execution of total work commitments of USD 270,000 over 18 months; a 2% NSR; and a percentage payment of project expenditures, considered as an advanced royalty.
SearchGold has now fulfilled its USD 270,000 work commitment. In order to maintain its 100% interest, SearchGold has to execute the advance royalty payments which are to be paid on a quarterly basis and represent percentage payments of project expenditures with a minimum of USD 10,000 per quarter.
In December 2006, the Company entered into an option agreement with Arc Mining Corporation ("Arc"), a wholly owned subsidiary of Zambezi Gold Plc, a company registered in the United Kingdom, to acquire a 50% interest in the Booué-Mimongo Project in Gabon.
The Booué Gold Property consists of one 7,336 km² Prospecting Authorization and is located in north central Gabon. The Mimongo Gold Property consists of one 529 km² Prospecting Authorization and is located in south central Gabon. SearchGold is the project operator and can acquire a 50% interest in both properties over three years by incurring a total of US$1,500,000 in exploration expenditures as follows : US$250,000 the first year, US$500,000 in the second and US$750,000 in the third year.
Arc is a private Luxembourg based mining company involved in the acquisition and development of mining projects and managed by a team of well respected mining professionals. Once SearchGold earns its 50% interest in the projects, SearchGold and Arc will contribute jointly to further develop the properties. A 2% NSR is payable to DeBeers.
The two new permits, Dou and Taouremba, have respective surface areas of 241 km² and 211 km² for a total of 452 km². They are located in the Sanmatenga and Seno provinces, approximately 300 km north of Ouagadougou, Burkina Faso's capital, and are directly accessible by road.
Directly accessible by road, Zitenga II's surface area is 184 km², located approximately 40 km northeast of Ouagadougou, Burkina Faso's capital. This third permit, obtained through direct application to the Ministry of Mines of Burkina Faso provides SearchGold 100% interest here; interests in the Dou and Taouremba properties are likewise 100%.
SearchGold Resources has entered into an option agreement dated September 18, 2008, with Somika SARL ("Somika") to acquire 100% interest in the 400 km² Arae-Gassel Gold Property ("Arae-Gassel") located in northern Burkina Faso, West Africa. SearchGold can acquire a 100% interest in Arae-Gassel over one year by meeting the following conditions:
- Paying Somika a total of $US110,000 as follows: $US50,000 upon signature; $US30,000 six months after the date of signature; and $US30,000 twelve months after the date of signing;
- By issuing Somika a total of 800,000 SearchGold shares as follows: 200,000 shares upon signature and 600,000 shares on the first anniversary date; and
- By incurring a total of $US750,000 in exploration expenditures over the first year.
Following SearchGold's acquisition 100% interest, Somika will retain a 3% Net Smelter Return (the "NSR"). SearchGold will have the right to purchase up to half of the NSR held by Somika (or 1.5%) for $US500,000 per 0.5% NSR bracket, or for a total of $US1,500,000 for 1.5% of the NSR held by Somika.
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