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Kilo Goldmines receives $1.43 mln payment under Isiro option from Rio Tinto

Kilo Goldmines (CVE:KGL) announced Thursday that it received the $1.43 million cash payment from Rio Tinto Mining and Exploration Ltd.

The payment was made under the terms of its earn-in option to joint venture agreement for the Isiro iron ore project in Orientale province, in the Democratic Republic of Congo (NYSE:DRC).

Rio Tinto Mining and Exploration Ltd is a unit of mining giantRio Tinto (LON:RIO)(NYSE:RIO).

Under the terms of the agreement, which the companies entered into in April 2011, Rio Tinto earns a 15 percent interest in the project. Kilo will continue to hold 75 percent, while Suez Holdings Ltd will now hold 10 percent.

Since Rio Tinto made the payment before the December 31, 2012 deadline, the company is not required to pay the full $1.5 million purchase price.

Kilo president and CEO, Alex van Hoeken said: "We are very pleased with the progress of the project to date.

"This confirms Kilo's strategic vision of acquiring properties of merit in the district and value creation for the company. The accelerated payment will benefit the advancement of the company's Somituri project during 2012."

The company has been attempting to ramp up its presence in the iron ore sphere. Late in 2011, the company said it submitted a bid for the mining rights to the four-concession Hajigak iron ore deposit in Afghanistan.

The company has not been notified yet by the Afghan Ministry of Mines of the outcome of the bidding process. If selected, Kilo would have the exclusive right to negotiate with the ministry for the mining rights to the concession block for which it was selected as a "preferred bidder" before a final award is made.

The Hajigak iron ore deposit is situated in the mountainous Bamyan province, 130 kilometres west of the capital, Kabul. It is one of several iron deposits within this area and is the largest located to date.

If awarded, the project would be held in a new entity with Kilo receiving an initial 20 percent interest, subject to dilution, but with no funding obligation.

Kilo has over 7,000 square kilometres of Archaean Kabalian greenstone in the Kilo-Moto area in the Democratic Republic of the Congo. The company owns a 71.25 percent interest in the DRC entity that holds the Somituri Project Exploitation Permits.

Today's news sent Kilo shares up 12.5 percent to $0.18, as of 12:53 pm EDT.