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Silver Swan Group (ASX: SWN) is a polymetallic explorer with tenements in the Murchison District of the Yilgarn Craton, Western Australia. The company's current focus is on lode-gold, syn-tectonic copper-gold and volcanogenic massive sulphide (Cu-Zn-Ag-Au) mineralisation in Archaean terranes. Exploration tenements held by Silver Swan...Read more
Silver Swan Group set to strengthen cash position with A$2.1m fully underwritten raisingJuly 02 2012, 3:38am
Silver Swan Group (ASX: SWN) is building its cash reserves with the launch of a A$2.1 million fully underwritten rights issue to fund continued exploration at its La Codosera Gold Project in Spain, as well as on its Australian projects.
Boutique investment and advisory group Cygnet Capital has agreed to fully underwrite the rights issue.
Silver Swan is offering existing shareholders one new share for each two existing shares held each at $0.032 per share, and one free attaching listed option for every two new shares issued, exercisable at $0.07 each on or before 30 June 2015.
Dr Susan Vearncombe, managing director, commented on today’s news: “The funds will help to accelerate the evaluation of our two main projects with drilling and the evaluation of new opportunities both in the Iberian Peninsula and elsewhere.
“We are delighted to have the strong commitment of Cygnet Capital to our plans.”
Importantly, the rights issue will add to Silver Swan’s cash position of around $3.4 million at the end of the March 2012 quarter.
Exploration progress – Spain
Silver Swan is on the cusp of beginning its next phase of exploration at La Codosera with the start of an auger drilling program on 9 July.
The company is also currently sourcing a diamond drill rig for planned holes focused initially on the Monteviejo and Los Bastos prospect areas.
An initial 12 diamond drill holes for a total of 1,100 metres will target a stacked lode gold system over a strike length in excess of 1 kilometre
The initial program will also inform Silver Swan’s current structural model in order to target the system extension to depth. The program will test mineralisation in the upper 100 metres from surface.
The La Codosera Gold Project, located in one of the most famous historic gold districts in Spain, is geologically similar to Alaska’s 6.6 million ounce Juneau mine and the 4.2 million ounce Haile mine in the Carolina Slate belt.
La Codosera comprises five permits covering 18.5 square kilometres, located 40 kilometres from the provincial capital Badajoz of the Extremadura region of western Spain.
The Extremadura region is one of the most famous historic gold districts in Spain.
Other gold operations in the region include Astur Gold Corporation’s (TSX: AST) Salave project which hosts a Measured and Indicated Resource of 1.68 million ounces.
The project contains extensive historic gold workings with historical exploration demonstrating gold-bearing vein systems over a strike of 2.8 kilometres.
Historic high grade gold intersections include 10 metres at 3.6 grams per tonne (g/t) gold, 4.6 metres at 2.3g/t gold and 8 metres at 3g/t.
There are at least eight gold occurrences at La Codosera as well as Roman hard rock and alluvial workings and, importantly, large undrilled areas.
La Codosera is held in joint venture with Astur Gold. Silver Swan will spend A$3 million on exploration in stages to earn an 80% interest in the project.
The company must spend $1.5 million to earn an initial 51% within 3.5 years, including a $500,000 minimum expenditure commitment to be fulfilled within 14 months.
To increase its interest to 80%, Silver Swan must spend a further $1.5 million within five years.
Exploration progress – Australia
Silver Swan has begun diamond drilling at its Quinns North VMS project, which hosts a JORC Resource of 1.48 million tonnes at 1.02% copper, 1.39% zinc, 0.24g/t gold and 3.3 g/t silver at the Austin Deposit.
Importantly, nearly 1.2 million tonnes of that is in the higher confidence Measured and Indicated categories.
To date, Silver Swan has defined 25 kilometres of strike with the potential to host VMS mineralisation.
The Quinns Project is strategically located in the Yilgarn region of Western Australia, an area full of VMS discoveries including Golden Grove Minerals & Metals Group's 19 million tonnes at 2.8% copper, 0.2% zinc project.
The region also boasts Independence Group's (ASX: IGO) Teutonic Bore project of 1.55 million tonnes at 1.6% copper, 3.1% zinc as well as the Jaguar 2.55 million tonnes at 2.4% copper, 5.6% zinc project.
Silver Swan is drilling for potential copper-rich feeder zones to the upper zinc mineralisation intersected at Quinns North, targeting the discovery of potential new VMS cells to expand the project’s existing Resource.
Three holes are planned for a total of about 900 metres and a fourth hole may be drilled to 400 metres depth, subject to confirmatory geophysics.
Drilling has begun down plunge of and between two previous drill holes which intersected zinc mineralisation of 10 metres at 4.7% zinc and 6 metres at 7% zinc, with a visible increase in disseminated copper mineralisation with increasing depth.
Earlier exploration has previously delivered broad, high grade intersection from the Austin Deposit of 58 metres at 2% copper from 148 metres, including 5 metres at 10% copper and 2 metres at 17% copper; and 38 metres at 14% zinc from 105 metres, including 2 metres at 46% zinc and 6 metres at 33% zinc.
Silver Swan will be trading around cash backing with the completion of the capital raising. The company has a market cap. of just $5 million against cash of around $5.5 million following the completion of the raising.
The company currently has an enterprise value of just $1.6 million, and an EV/Resource of around $1 per tonne, which appears slight when compared to its peers.
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