West Perth-based minerals explorer Avoca Resources Ltd has acquired two gold projects after signing agreements with West Perth-based gold explorer Chalice Gold Mines Ltd and Perth-based Resolute Mining Ltd.
West Perth-based minerals explorer Avoca Resources Ltd has acquired two gold projects after signing agreements with West Perth-based gold explorer Chalice Gold Mines Ltd and Perth-based Resolute Mining Ltd.
Avoca will issue 3.5 million shares worth $5 million to Chalice as well as 2 million three-year options with an exercise price of $1.79 - which Chalice said toay was valued at around $1.1 million.
The company will also issue shares worth $800,000 following the completion of certain conditions.
The acquisition of the Higginsville and Chalice gold projects, located in the Higginsville-Norseman region, is subject to shareholder approval.
The total consideration for the Higginsville and Chalice Gold Projects excludes $159,000 of performance bonds associated with the Chalice Mining Lease, which will be met by Avoca.
The company will also assume environmental liabilities of Resolute at Higginsville and replace performance bonds totaling $2.5 million.
The full text of a company announcement is pasted below
Avoca Resources Limited (ASX: AVO) has significantly enhanced its project development pipeline in the Higginsville-Norseman region of Western Australia after today announcing the acquisition of two strategic gold projects through separate agreements with Chalice Gold Mines Ltd and Resolute Limited. The acquisitions firmly cement Avoca's position as the premier landholder in the historic Higginsville-Chalice Goldfield that is situated between the two world-class gold mining centres of St Ives (+15Moz) and Norseman (+6Moz).
Avoca said today (Tuesday) that it had reached agreement with Chalice Gold Mines ("CGM") to acquire a 100% interest in CGM's Chalice and Higginsville Project, located adjacent to Avoca's flagship 800,000oz Trident Gold Project. Trident is located some 50km north of Norseman.
The Chalice gold mine was operated in the 1990s by Resolute Limited ("Resolute") and was one of Australia's most profitable open pit gold mines, producing 520,000oz from an open pit, together with 39,000oz from a small underground mine. The Chalice Project contains an underground resource of 460,000 tonnes at 5.31g/t gold for 79,000oz, with substantial exploration upside.
The acquisition further increases Avoca's already significant landholding between St Ives and Norseman to 2,106km2 and consolidates its regional ground position, which includes the Trident Project (already under development) and a total resource inventory of 1.1 million ounces.
Separately, Avoca has reached agreement with Resolute to acquire a strategically located tenement immediately adjacent to the Trident Project. The Tenement, M15/348, is centrally located within the 5km long Higginsville gold trend, and accordingly offers excellent potential for the discovery of Trident style deposits. Also included in the M15/348 acquisition are two unused tailings cells that have sufficient capacity to hold all of the tailings that will be produced from the treatment of the 800,000oz Trident deposit.
Avoca's Managing Director, Mr Rohan Williams, said the Company was confident that the consolidated Higginsville-Chalice project holding had the potential to develop into one of Western Australia's premier gold mining districts. "Significantly, the combined project areas lie within a 30km radius of Avoca's wholly-owned 1Mtpa CIL treatment plant, scheduled for commissioning in 2008," Mr Williams said.
"Our geologists believe that the Chalice and Trident gold deposits share many similarities, with the Chalice Project offering significant exploration upside which can be pursued in parallel with our ongoing exploration efforts at Trident," he added. At Trident, Avoca has to date identified three major high-grade and adjacent gold zones, including the Apollo discovery, announced in March 2007.
The Chalice Project adds a potential second underground development opportunity to Avoca's portfolio, with the A$103 million development of the Trident Gold Project already underway and fully funded.
Avoca plans to commence an immediate assessment of the Chalice Resource, using its comprehensive understanding of the Trident Deposit to target potential extensions of the known mineralization. Avoca also plans to conduct follow up drilling of several significant drill intersections from the Chalice and Higginsville tenement acquisitions, including: 4m @ 33 g/t gold; 6m @ 19 g/t gold; 16m @ 8 g/t gold; 2m @ 37 g/t gold; 5m @ 11 g/t gold and 1m @ 367 g/t gold.
"This is a very exciting acquisition, complementing our success over the past three years at Higginsville," Mr Williams said. "We are very keen to assess the Chalice deposit for additional Trident-style zones. "An additional strategic bonus for Avoca, is the Chalice borefield, which forms part of the acquisition and will, if required, provide a long term water supply for our Trident treatment plant."
"In addition to the significant potential at Chalice, we also have several prospects within the Higginsville Project that have recently returned high-grade results and which we plan to follow up with a detailed appraisal program," he added.
Avoca's agreement with Chalice Gold Mines to acquire the Higginsville and Chalice Gold Projects is subject to shareholder approval at a General Meeting which will be scheduled to be held in June.
Subject to this approval, Avoca will issue to Chalice Gold Mines consideration of 3.49 million fully paid ordinary Avoca shares to a value of $5 million as Tranche 1, and 2 million three-year options with an exercise price of $1.79.
The second Tranche of shares to a value of $0.8 million will be issued following the completion of certain conditions. The price of the Tranche 2 shares will be based on a 5 day VWAP prior to the conditions being met.
The total consideration for the Higginsville and Chalice Gold Projects excludes $159,000 of performance bonds associated with the Chalice Mining Lease, which will be met by Avoca.
In return for acquiring M15/348 from Resolute, Avoca will assume all of Resolute's environmental liabilities at Higginsville and replace performance bonds totaling $2.5 million.