Mutiny Gold enters alliance to fast track development of White Well gold project

Mutiny Gold (ASX: MYG) has entered into a “tribute mining agreement” with Cobra Mining Pty Ltd in order to fast-track the development of the company’s White Well Gold Project in Western Australia.

The alliance brings mining expertise and financial strength to the project development and provides Mutiny with an opportunity for a revenue stream in times of record gold prices at the lowest possible risk.

Cobra is to fund mine development operations at the project located east of Cue, which have commenced with the aim of bringing the mine into production as soon as possible.

Importantly, the agreement allows Mutiny to focus on Deflector Gold-Copper Project. The latest round of high grade hits from drilling at the project was significant for Mutiny, as the results will be incorporated into a revised resource estimation to be released in coming weeks.

Adding further upside at Deflector, the indications are good that high grade mineralisation continues at depth.

John Greeve, Mutiny Gold’s managing director, said “White Well is not part of Mutiny’s Gullewa gold tenement region (which contains the company’s lead Deflector Gold Copper Project), and this agreement enables Mutiny to maintain full focus on Deflector.”

The agreement is a win/win situation for both Mutiny and Cobra as it also provides the companies with a chance to move quickly to commercialise the total estimated White Well resources of 113,000 ounces of gold at a time of record gold prices.

Under the deal Cobra will fund and conduct the mining operations for a 70% share of the profit.

Mutiny will receive 21%, with joint venture partners Lee/Daxon receiving 9%. The operation strategy is to mine the White Well deposit by open pit.

The White Well Deposit has total estimated resources are 113,000oz gold comprised of 91,000oz free-digging oxidised Indicated Resource (4.2m at 0.67g/t) and 22,000oz Inferred Resources (0.3Mt at 2g/t for 20,000oz of transition mineralisation and 0.07Mt at 1 g/t of oxidised material in stockpile for 2,000oz).

The agreement does not include the advanced exploration targets of Bounty and Bligh, which are separate zones within the White Well tenement.

Mutiny released a scoping study of White Well in February 2009. The company’s plan for unlocking the value of White Well includes open pit mining then trucking an ore concentrate of 8g Au /t to Gullewa for processing.

Cobra has until 31 December 2011 to complete its mine study phase and declare its decision to commence mining.

Upon Cobra attaining approval of their mining proposal they must pay $750,000, of which Mutiny receives 70%.