South African gold mining company AngloGold Ashanti has announced its intention to invest C$22.05m ($16.5m) for a 11.7% stake in Canadian miner G2 Goldfields.

This will see AngloGold acquiring 24.5 million G2 shares at C$0.90 apiece. As part of the investment, AngloGold will also be offered pre-emptive as well as top-up rights for G2’s security issuances in the future.

The shares will be sold on a private placement in the US and subject to a four-month hold period.

Finalisation of the transaction is subject to the two companies signing definitive documentation, which is expected next month.

G2 CEO Dan Noone said: “We are delighted Anglo Ashanti has confirmed it intends to be a major shareholder in G2. This is a testament to the quality of our assets and exploration team. Anglo Ashanti’s investment will allow us to continue to advance our high-grade OKO project whilst aggressively exploring our district scale land package.”

AngloGold Ashanti CEO Alberto Calderon said: “This strategic investment in G2 will provide us with a strong position in one of the world’s key gold provinces with significant potential for new discoveries. We look forward to G2’s continued exploration success as the Guiana Shield continues to develop.”

G2 carries out exploration activities in Guyana, which hosts the Guiana Shield, considered to be one of the most prospective gold provinces globally.

The company plans to use the net proceeds from the investment to support further exploration at its Oko project in Guyana as well as for its working capital and general corporate requirements.

Located in the Cuyuni mining district, the 19,200-acre Oko project has 17km of prospective strike length. It includes the Oko main zone and Ghanie deposits.

OKO main zone indicated mineral resources are estimated to be 220,000oz of gold (Au) – 793,000 tonnes (t) at a grading of 8.63g/t Au.

The inferred mineral resource estimate is 974,000oz Au (3,274,000t at a grading of 9.25g/t Au).

The company plans to publish an updated mineral resource estimate in the first half of next year.

In August this year, AngloGold Ashanti put its Brazilian mine Córrego do Sítio (CDS) on care and maintenance following sustained losses.

The mine’s production has been low while its costs remain significantly higher than the price of gold. For the first half of this year, it reported a negative free cash flow of $30m (R548.65m).