Kalamazoo Resources has signed an agreement with the renowned De Grey Mining operation for a potential $33 million future sale of its Ashburton gold project in Western Australia’s Pilbara region.
As part of a newly-struck option agreement, De Grey will initially pay $3 million, granting it a 12-month exclusivity period to complete due diligence on the project, with a required minimum spend of $1 million to go towards exploration and assessment activities. De Grey will also have the right to extend the option period for a further six months and must share the results of its work with Kalamazoo.
At any point during the period, De Grey may exercise the option and purchase the project for $30 million in cash or shares, to be paid as $15 million on exercise and another $15 million 18 months later.
The project’s mineral resource includes material from four deposits and sits at 16.2 million tonnes grading 2.8 grams per tonne gold for 1.44 million ounces across the indicated and inferred categories.
With the initial $3 million Option Fee, we will look to immediately progress with exploration on our highly prospective Mallina West Gold Project 50kms to the south-west of Hemi, and at our exciting portfolio of Victorian Gold Projects. On the exercise of the Option, Kalamazoo will receive total sale proceeds of $30 million that is consistent with our strategy of identifying, acquiring, and discovering projects which we can enhance, and thereby create tangible shareholder value. Kalamazoo Resources executive chairman Luke Reinehr.
Reinehr also said it was important to note that the company would not be exposed to longer-term development and financing risks inherent in a big new mining project during the currently challenging economic times. Kalamazoo plans to use the funds from De Grey to continue its exploration efforts, which may also include the acquisition of new projects.
The company is maturing ground at its 80 per cent-owned Mallina West gold project in the Pilbara where it is sitting on 484 square kilometres of tenements prospective for “Hemi-style”, intrusion-related gold mineralisation similar to that seen at De Grey’s Hemi gold discovery that sits 50km to the north-east.
Hemi has a total mineral resource of 254.5 million tonnes at 1.3g/t gold for 10,456 ounces and mineralisation has been confirmed across a huge area of more than 2000m north-south and 3500m east-west to depths of up to 500m.
In central Victoria, Kalamazoo is working on a 2006sq km portfolio of tenements in the Bendigo Zone, an area which has historically produced in excess of 60 million ounces of gold.
Last year, the company launched a three-hole diamond drill campaign at the Goldie North prospect within its Mt Piper gold project in central Victoria, following up on high-grade gold in rock chip samples going as high as 74g/t and 72g/t gold. It also completed a spin-out into lithium just last month, with its Kali Metals initial public offering to raise $15 million heavily oversubscribed.
ASX punters seemed to like today’s news, giving Kalamazoo a share price hike on solid volumes of almost 24 per cent from yesterday’s close to hit 11.5c late in the morning.
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