Latin Gold (ASX: LAT) has negotiated a deal that will see it acquire up to an 80% stake in the brownfields Buhemba Gold Project in Tanzania.
The project was formerly an active mining operation between 2003 and 2007, hosting multiple open cut mines and having produced 274,000 ounces of gold
Buhemba has a remaining near surface exploration target of between 400,000 and 600,000 ounces at 1.9 to 2.2 grams per tonne (g/t).
Under the agreement, Latin Gold will acquire 100% of the issued capital of Manjaro Resources, which holds a 60% interest in Buhemba and the right to acquire an additional 20% interest in the project prior to a decision to mine.
Consideration for the deal is the issue of up to 350 million Latin Gold shares and A$500,000 in option payments for a three month due diligence period.
Buhemba history
Exploration by Tanganyika Gold in the mid-1990s delineated six main mineralised zones where significant shallow gold discoveries were made.
A number of these discoveries were subsequently mined as a multiple open cut operation between 2003 and 2007 by a South African registered mining company, before the mine was closed down prematurely in 2007.
In addition to the exploration target, there is potentially a significant tailings inventory contained within the project area.
Historic evaluation drilling over the tailings at Buhemba indicates an exploration target of between 900,000 and 1,000,000 tonnes at 1.4 to 1.7g/t for between 40,000 and 50,000 ounces.
Initial evaluation work by Manjaro has determined that considerable potential also exists for the discovery of additional mineralisation down dip and proximal to the known mineralisation.
The Buhemba project area would also appear to have higher grade depth potential as it covers the historic Nyasenro mine, which produced up to 350,000 ounces of gold at 13.5g/t between 1930 and 1970.
Exploration plan
If due diligence is successful, Latin Gold plans to undertake an exploration program at Buhemba over the next 12 months.
This exploration will include confirmation drilling over historic resource blocks and tailings, as well as drilling to test a number of step-up exploration targets within the project area.
Latin Gold is over 70% cash backed with $3.03 million, or $0.009 per share, in cash at the end of the December 2012 quarter and a market cap. of $4.2 million ($0.013 share price).
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX “Small and Mid-cap” stocks with distribution in Australia, UK, North America and Hong Kong / China.