Alchemy Resources Limited has entered into an agreement with Troy Resources NL to acquire the Three Rivers Gold Project for $2 million.
West Perth based Alchemy Resources Limited has entered into an agreement with Troy Resources NL to acquire the Three Rivers Gold Project for $2 million.
An initial payment of $1.31 million will comprise of $310,000 cash payable on execution of the sale agreement and $1 million in fully paid Alchemy shares.
A further payment of $0.69 million, to be satisified either by the payment of cash or the issue of Alchemy shares, will be made to Troy upon delineation of 50,000 ounces of gold reserves at the Project.
Full announcement below:
Alchemy Resources Limited has entered into an agreement with Troy Resources NL to acquire the Three Rivers Gold Project, located approximately 120 kilometres north of Meekatharra in the Gascoyne Region of Western Australia.
The Three Rivers Gold Project comprises 7 exploration licences and 31 mining lease applications covering approximately 350 square km.
Alchemy was attracted to the Project because of the Hawkeye and Trapper deposits within E52/698 which contain a JORC code compliant potentially open pittable Indicated Mineral Resource of 1.7Mt at 2.4 g/t Au (above a 1.0 g/t Au cut-off), which equates to 131,000 ounces of contained gold as estimated by Snowden Mining Industry Consultants in March 1998.
Alchemy was also attracted to the iron ore prospectivity of the tenements, which are located in the Robinson Range, adjacent to land currently being explored by Midwest Corporation Limited. The Company's Chairman, Mr Warwick Davies, has over 30 years iron ore experience at senior executive level with Hamersley Iron and Robe River Mining, and will play a leading role in evaluating the iron ore potential of the Three Rivers Gold Project area.
Alchemy Managing Director, Michael Hannington said, "The Three Rivers Gold Project has the potential to quickly allow Alchemy to convert known resources into reserves and transform the company into a gold producer. In addition, the remainder of the tenements have the potential to host several large mineralised gold systems similar to Peak Hill located 25km west of the Project. This acquisition is the first tangible result of our strategy to acquire or develop projects in the Murchison and surrounding districts of Western Australia."
The exploration upside of the Project is supported by recent drill results published by Sandfire Resources NL in April 2008, on its Doolgunna Project which is directly adjacent to the Three Rivers Gold Project. Sandfire recorded significant gold intersections of 23m at 4.07 g/t Au, 22m at 3.01 g/t Au, 10m at 7.15 g/t Au, 7m at 7.28 g/t Au and 6m at 9.72 g/t Au. It also recorded shallow intersections of iron mineralisation with a best result of 12m at 56.8% Fe and 0.014% P.
Alchemy intends to mobilise a diamond drilling rig to the Hawkeye and Trapper deposits and convert these indicated resources into JORC-compliant reserves as soon as possible.
Alchemy was successful in the tender for the Project as it was able to demonstrate to Troy that it has the professional, technical and operational skills to develop the Project and commence mining quickly and efficiently.
The Company complemented these skills by forming partnerships with the following companies and individual, which form a core team to develop the Project:
- Alchemy has appointed Alliance Drilling Pty Ltd ("Alliance") to conduct all drilling services at the Project. Alliance is a drilling company based in Cue providing drilling services to companies in only the surrounding district. As previously announced in March 2008, Alchemy has secured Alliance to a long term drilling contract at very favourable rates.
- Alchemy has engaged Carey Mining Pty Ltd ("Carey Mining") to provide contract mining services to the Project. Carey Mining is a highly regarded mining contractor servicing major Australian mining companies.
- Alchemy has retained Mr Daniel Tucker, CEO of Carey Mining, a well respected indigenous businessman and community leader, to assist in negotiating and bringing to a satisfactory conclusion all required agreements with indigenous stakeholders. Mr Tucker has a proven track record of fostering close working relations between indigenous stakeholders and exploration and mining companies.
- Alchemy has received a Letter of Comfort from Barrick Gold of Australia Ltd ("Barrick") to deliver ore from the Three Rivers Gold Project to Barrick's Plutonic operations for toll treatment. Alchemy will investigate alternate treatment options which have the potential to enhance the Project's profitability.
Consideration for the acquisition of the Project is $2 million. The initial payment of $1.31 million (representing $10 per resource ounce) will comprise:
a) $310,000 cash payable on execution of the sale agreement; and
b) $1 million in fully paid Alchemy shares based on a 14 day weighted average price prior to the completion date under the sale agreement. A meeting of shareholders will be convened to seek approval for the issue of shares.
A further payment of $0.69 million, to be satisified either by the payment of cash or the issue of Alchemy shares based on a 14 day volume weighted average price, will be made to Troy upon delineation of 50,000 ounces of gold reserves at the Project, which represents a value of $40.00 per reserve ounce of gold.
Alchemy has also agreed to grant to Troy a net smelter return royalty on gold produced from 50,000 to 70,000 ounces as well as a royalty of 75 cents per tonne on all iron ore produced from the Project area.
Mr Hannington said, "Having listed on the ASX in November last year, Alchemy is focussed on growing value for shareholders and this acquisition is an important part of the Company's strategy to grow quickly from a gold explorer to a gold producer. We thank Troy for their confidence in us and welcome Troy as a shareholder."