Liontown Resources (ASX: LTR) has secured an option to acquire a 100% interest in a high grade gold project in the Lake Victoria Goldfield of northern Tanzania from private Tanzanian company Bismark Hotel Mining Company.
Importantly, this option provides the company with a low cost entry to a prospective ground package with extensive gold mineralisation.
The project, named the Rupa/Suguti property, comprises a largely contiguous package of tenements covering Archaean greenstones, and includes a previously defined 7 kilometre long, east to west trending gold mineralised corridor.
The Rupa-Suguti Option Agreement is Liontown’s second property in Tanzania alongside the Jubilee Reef Project located about 200 kilometres to the south.
In the 1990s, shallow reverse circulation drilling of 16 holes over an 800 metres section, known as the Chirorwe prospect, recorded multiple intersections that indicate the presence of good gold grades and continuous mineralisation.
Highlight intercepts include 12 metres at 3.9 grams per tonne (g/t) gold from 32 metres, 6 metres at 6g/t gold from 26 metres and 8 metres at 4.3g/t gold from 10 metres.
There has been no drilling on the property since the 1990s program and the mineralised trend remains open in all directions.
In 2008-09, Twigg Gold also held an option on the property and excavated a single trench across the Chirorwe mineralised zone, as well as undertook soil sampling and ground magnetics over the larger project area.
Assays from the trench recorded 16 metres at 5.5g/t gold with strong gold values recorded from both siliceous lode material and adjacent altered basaltic wall rocks.
As part of the due diligence process, Liontown undertook rock chip sampling of artisanal workings coincident with the area drilled at Chirorwe recording strong gold values of up to 18.9g/t in lode material and adjacent wall rock, over a 600 metre strike.
Gold assays from Liontown’s sampling are consistent with previous drilling and trench results.
The company will complete infill soil sampling over the entire 7 kilometre long gold corridor to define further drill targets in addition to the Chirorwe prospect.
Option terms
Under the option agreement, Liontown must make an initial payment of US$20,000 and annual payments of US$15,000 for up to three years.
The company then has the right to wholly acquire the project by paying between US$750,000 and $1.5 million depending on the timing of exercising the option and the grade and tonnage of any resource discovered.
Once the option is exercised, Liontown will also pay Bismark a royalty of US$3 per ounce.
At the end of the March quarter 2013, Liontown’s cash balance was about $1.4 million.
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