The Kalana Mine was historically owned by a Malian state-owned enterprise, SOGEMORK, which received financial and technical support from the former Soviet Union for exploration and mine construction. SOGEMORK operated a small underground gold mine operated for a few years until the dissolution of the Soviet Union in late 1991, at which time it was put on care and maintenance.

The Kalana Mine (and its related permits) was privatized via international tender and ultimately awarded to Avnel Gold in 2003. One of the conditions of the tender agreement required that the small, 140-tonne per day, Soviet-built gravity recovery mine be put back into immediate production for a period of no less than three years. Avnel Gold restarted the Kalana Mine in 2004, principally as an exploration tool and to help maintain socioeconomic stability in the surrounding communities. Since its restart, the mine has produced more than 150,000 ounces of gold.

In 2009, Avnel Gold entered into an option agreement with IAMGOLD, a senior gold mining company with several operations in West Africa, who shared the Company’s view that Kalana had the potential to be transformed into a low-cost, open-pit mining operation. Under the terms of the option agreement, IAMGOLD had the right to earn a 51% interest in Avnel Gold’s 80% equity interest in the Kalana Permit by spending $11 million on exploration over a three-year period and making two $1 million cash payments.

Between August 2009 and February 2013, IAMGOLD spent approximately $32 million on exploration on the Kalana Exploitation Permit. IAMGOLD also invested about $15 million in Avnel Gold over this period to help fund our efforts to help support the local community, which principally included subsidizing the costs of the small underground mine.

The IAMGOLD work program focused primarily on the evaluation of the immediate area surrounding the Kalana Mine with the goal of defining a sizeable bulk mineable resource. IAMGOLD’s option Agreement lapsed in March 2013 as they did not produce a technical report for an updated mineral resource estimate based upon their work, which was required under the terms of the option agreement.

Immediately following the lapse of the option agreement with IAMGOLD, Avnel Gold embarked on a technical campaign with the goal of completing the work program designed by IAMGOLD. This resulted in the updated mineral reserve estimate that formed the basis for a Definitive Feasibility Study (“DFS”) for an open-pit mining operation at Kalana.

The Company reported the results of the DFS in March of 2016, which outlined a potential 18-year mine life recovering 1.82 million ounces of gold. Utilizing a gold price of $1,200 per ounce and a 5% discount rate, the DFS reported an after-tax IRR of 38% and a net present value of $257 million on a 100% project basis. We are now advancing the project towards construction and are targeting production in 2018.

To learn more about the Kalana Gold Project or to review the Kalana DFS, click on the links below:

Kalana DFS

History of the Kalana Gold Project