$7.5m IPO for golden Chalice

A new Western Australian gold float is being prepared to breathe life back into the rich Chalice gold mine, which helped make many fortunes in the mid 1990s.

The new company, Chalice Gold Mines Ltd, is being spun-out of the suite of gold, uranium, nickel and base metals prospects held by relative newcomer, Bullion Minerals Ltd.

In a three-out-of-one restructure, Bullion will become a uranium explorer, change its name to Uranium Equities Ltd and move to South Australia. The base metals assets will also be spun-off later.

Most of the gold projects, including the Chalice mine and nearby Higginsville prospects between Kalgoorlie and Norseman, were acquired from Resolute Mining Ltd in October 2003 and have their origins in that company’s takeover of Samantha Gold NL 12 years ago.

It was Samantha, headed by Simon Lee and Nick Giorgetta, that found Chalice in 1993, a discovery that sent Samantha’s shares through $8 and sparked the then Michael Carrick-led Resolute’s takeover in 1994.

In its four-year life to early 1999, the high-grade, low-cost Chalice open pit produced 556,000 ounces, earning more than $200 million before production was curtailed when the pit hit a granite sill. There was little drilling at depth.

On the back of a soaring gold price, Chalice is seeking to raise $7.5 million to fund a return to those glory days, among other things.

It is understood the initial public offer document could be lodged early next month ahead of listing 72.5 million shares and 2.5 million options in mid March.

Bullion is expected to end up with between 40 and 50 per cent of the company, which will be distributed to shareholders in the near future.

Chalice executive chairman, Bullion managing director and former GRD Ltd finance director, Andrew Bantock, told WA Business News the new company was being formed because Bullion: “Just does not have the capital to do the high level of exploration its gold projects require.

“This way we can unlock those assets and get some real activity happening,” he said.

More than $5 million of the raised capital will be directed to exploration during the next two years.

The major targets will be the Chalice gold mine and its extensions, which already have a 163,000-ounce resource, and the nearby Higginsville prospects.

At Chalice, the existing resource is around the existing open pit and deeps-1 and deeps-3 down to about 400 metres. Exploration will be directed towards increasing the existing resources and looking down plunge to find deeps-4.

The existing, partly water filled, 185-metre deep open pit has a further 20 metres of vertical underground access running off the bottom that would be used to access future deeps resources.

The big attraction at nearby Higginsville, another Samantha play that produced 600,000 ounces in the mid to late 1990s, is Perth-based neighbour Avoca Resources’ high-grade 485,000-ounce Trident discovery.

Recent excellent results from drilling Trident’s Athena load indicate this resource will be substantially upgraded very soon.

Avoca’s pre-feasibility study has indicated a five-year underground operation just on current reserves.

Avoca is drilling north and south of Chalice’s ground, on which the new float has identified five targets for immediate drilling, all south of Trident.

In the West Pilbara, Chalice’s 1,400 square kilometres of Yandeearra tenements include those just south of Range River Gold Ltd’s high-grade 530,000-ounce Indee gold project, expected to be in production around March-April this year.

Mine construction there began this month with the heap leach facilities scheduled to be installed by the end of March.

The Chalice board will include Mr Bantock, exploration director John McIntyre, Kalgoorlie-based Bryan Alexander and non-executive director Tim Goyder.

Former senior vice-president and general manager of South Australian Beverley uranium mine owner Heathgate Resources, Mark Chalmers, will take over from Mr Bantock as managing director of Uranium Equities.

The company will be chaired by ex Perilya Ltd boss Tim Clifton.

As part of his contract and various performance criteria, Mr Chalmers and his associates will hold around 17.5 per cent of Uranium Equities.

Canadian explorer Laramide Resources is expected to hold about 16.5 per cent after injecting $3 million into the new initiative by subscribing for a big chunk of shares and unlisted warrants.

Bullion’s uranium portfolio is made up of 19 projects across three states.