Alkane Resources Ltd (ASX:ALK) has completed an investment into gold exploration company Calidus Resources Ltd (ASX:CAI) for 125 million ordinary shares at a placement price of 2.95 cents a share.
The investment totals $3,687,500 and is part of Alkane’s growth strategy for increasing shareholder value through investing its cash balance in junior gold mining companies.
Calidus was selected for its excellent prospectivity and clear path through feasibility to development, which fits with Alkane’s criteria of investments with high exploration potential and near-term development funding requirements.
Alkane managing director Nic Earner said the Calidus investment was an exciting opportunity for Alkane’s shareholders.
“Working collaboratively alongside the existing Calidus board and management team, Alkane brings additional capital and operating capability that will bolster the Warrawoona Gold Project as it moves through the critical feasibility phases in 2019.”
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The acquisition of the shares will give Alkane about 8.8% undiluted interest in Calidus and comes packaged with share options for a further 70 million shares at 3.5 cents a share, expiring on November 1, 2019.
On a fully diluted basis, which includes all ordinary shares plus the executed share options, Alkane’s 195 million shares will equate to about 10% of Calidus.
Alkane will also hold the right to seek a director's position if its holding is above 10%.
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Alkane and Calidus plan to form a technical committee to accelerate development of the Warrawoona Gold Project.
This arrangement is expected to bring greater experience and up-to-date commercial cost understanding to the smaller Calidus team.
Alkane brings extensive experience in project approvals, feasibility studies, commercial arrangements and commissioning and operation commencement from its development of the Tomingley Gold Operations and work undertaken at its Dubbo Project.
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Calidus controls the Warrawoona Gold Project 30 kilometres southeast of Marble Bar in the East Pilbara district in Western Australia.
The project has a 712,000-ounce resource and high exploration upside, with outcropping mineralisation at surface at all deposits which are open along strike and down-dip.
Many identified targets have also not yet been tested and the existing surface mineralisation suggests any initial mining operation will be open cut.