Can the Tembo Project Unlock Value for Lake Victoria Gold? (TSXV:LVG)

Highlights

• Lake Victoria Gold and Nyati Resources enter into a Letter of Intent for small-scale gold development at the Tembo Project.
• The joint venture will leverage Nyati's processing infrastructure with mineralized material from the Tembo Project.
• Proposed profit-sharing arrangement, with the majority of net profits allocated to Lake Victoria Gold.

Lake Victoria Gold (TSXV:LVG) has entered a non-binding Letter of Intent with Nyati Resources to explore a small-scale gold development at its Tembo Project in northern Tanzania, aiming to unlock value from its fully owned Tembo Mining Licences. The company is also part of the TSX Composite Index.

The Tembo Project, which spans several mining licences in Tanzania, is poised to benefit from the collaboration with Nyati. The joint venture will involve the integration of Nyati's existing infrastructure, including a gold processing plant, alongside additional processing capabilities currently under construction. This infrastructure will play a pivotal role in processing mineralized material from the Tembo Project and nearby Primary Mining Licences (PMLs). A special purpose vehicle (SPV) is expected to be formed to manage operations, ensuring compliance with Tanzanian mining regulations.

Strategic Collaboration with Nyati Resources

One of the key components of the proposed joint venture is the contribution of Nyati's processing infrastructure. This includes a gold processing plant with an existing capacity of processing tonnes per day and a larger plant currently under construction. In addition to the processing plants, Nyati will also provide essential infrastructure such as tailings facilities and surface rights, which are critical for the smooth operation of mining activities.

Furthermore, Nyati plans to raise a significant amount of capital to support resource development activities and the initial ramp-up of operations. This financial commitment will ensure that the venture has the necessary resources for early-stage development and ongoing operational needs.

Mineralized Material Supply and Operations

As part of the arrangement, Lake Victoria Gold's subsidiary, MIP, will supply mineralized material from its mining licences. The supply will be key to the joint venture’s success, ensuring a consistent stream of material for processing. In addition, MIP will work closely with Nyati to explore the potential for consolidating nearby PMLs, which could further expand the scope of operations.

MIP will also take on the responsibility of managing day-to-day operations, including appointing technical personnel, overseeing plant optimization, and engaging qualified contractors for mining and operations management. This operational responsibility is central to maximizing the throughput and recovery rates of the processing plants.

Profit Sharing Arrangement

The agreement between Lake Victoria Gold and Nyati Resources outlines an initial profit-sharing structure, which will be finalized through further negotiations and due diligence. According to the preliminary terms, the majority of net profits will be allocated to Lake Victoria Gold, while Nyati will receive a smaller share. This arrangement will ensure that Lake Victoria Gold retains a dominant portion of the profits, which could significantly enhance the value of its project.

The final terms of the profit-sharing arrangement, along with other aspects of the joint venture, will be determined after further due diligence and finalization of the operational details. This includes a review of the necessary documentation and regulatory approvals required to move forward with the development.

Next Steps and Due Diligence

The partnership will proceed with a thorough due diligence process to verify the technical and regulatory aspects of the proposed joint venture. Nyati will grant MIP access to all relevant documentation, including production data and regulatory approvals, to facilitate this review. Once the due diligence process is completed, the companies will proceed with finalizing the agreements and establishing the special purpose vehicle for joint operations.

This collaborative approach between Lake Victoria Gold and Nyati Resources provides a strategic path forward for both companies, utilizing existing infrastructure and mineralized material from the Tembo Project to create value. As the project progresses, the partnership will continue to explore additional opportunities to expand the scale and scope of its operations in northern Tanzania.