Scotgold has concluded an earn-in agreement to its Portuguese subsidiary, Scotgold Resources Portugal - which holds the Pomar licence - with PanEx Resources, it announced on Monday.
The AIM-traded company said the agreement remained subject to fulfilment of customary conditions precedent within 60 days, including completion of satisfactory due diligence by PanEx, and confirmation of title and authority.
On satisfaction of those conditions, PanEx will begin the initial project development phase, which would entail expenditure of up to 0.1m within 180 days of the agreement.
PanEx could choose to begin the first development phase within that period, under which it would expend at least 1.5m within 18 months of that decision.
Upon providing satisfactory evidence of such expenditure to Scotgold, Scotgold Portugal would issue shares
representing 50% of its total issued share capital to PanEx, the company explained.
PanEx could then choose to start the second project development phase, under which it would expend at least 5m within a further two years of election to do so, designed to complete a feasibility study.
Upon providing satisfactory evidence of that expenditure to the company, Scotgold Portugal would issue shares representing a further 30% of its total issued share capital to PanEx.
Scotgold said that, upon issue of the full 80% of the total issued share capital of Scotgold Portugal to PanEx, any further funding for the project would be provided pro rata by PanEx and the company.
The board said it would make further announcements upon the completion of due diligence and fulfilment of the conditions precedent.
"We are delighted to conclude this Agreement with PanEx, who, using their strong technical and financial resources, will enable the accelerated development of the highly prospective Pomar licence," said Scotgold CEO Richard Gray.
"In particular it allows us to retain an interest in the project as it advances and potentially continue to participate beyond the feasibility study stage."