Platina Resources Ltd (ASX:PGM) (OTCMKTS:PTNUF) (FRA:P4R) will expand its gold presence in Western Australia after signing a conditional term sheet to acquire the Xanadu Gold Project in a favourable regional scale structural setting in Ashburton province.
Xanadu is within proximity to the multi-million ounce Mt Olympus gold deposit explored by Kalamazoo Resources (ASX:KZR), which is just 7 kilometres to the east.
Platina managing director Corey Nolan said Xanadu added critical mass to the company’s gold portfolio at a low acquisition cost.
“Immense appeal”
He said: “Xanadu has immense appeal given the number and width of economic grade gold drill intercepts which have never been followed up with a systematic exploration campaign.
“The project has been the subject of a number of mainly shallow drilling programs and a historical gold heap leach operation.
“Our exploration strategy will initially comprise low-cost geophysics and geochemistry to build a deeper knowledge of the geological potential of the project and to define both shallow and deeper targets for drilling.
Nolan said the Xanadu Project secured a large alteration system hosted within sediments and carbonates prospective for intrusion-related gold mineralisation such as the Telfer Gold Mine of Newcrest Mining Ltd (ASX:NCM) and the Hemi discovery of De Grey Mining Ltd (ASX:DEG)).
He said Xanadu also displayed strong similarities to the Carlin gold deposits in Nevada, USA.
“Whilst we believe there is significant potential to expand upon the known oxide mineralisation, the longer-term prize is targeting primary mineralisation within the alteration core of the system which has never been tested by historical drill programs.”
Platina has entered into a conditional binding agreement with Mineral Edge Pty Ltd and Coolabah Resources Pty Ltd, owners of the tenements and option agreements relating to the tenements.
Key terms of the agreements include:
- Payment of A$300,000 in cash and the issuance of A$675,000 Platina ordinary shares priced at 5.3 cents per share on signing of the Sale and Purchase agreement. The shares will be escrowed for three months;
- At the 12-month anniversary of the Sale and Purchase agreement, Platina has an option to extend the agreement by issuing a further A$925,000 of Platina ordinary shares priced at A$0.053 per share to the vendors. If the option is not exercised the vendors can buy the tenements back for one dollar;
- A milestone payment of A$100,000 on reporting of a JORC (2012) mineral resource of 100,000 ounces of gold;
- A 1% gross gold royalty is payable on any gold produced from the prospecting licences and a further 1% new smelter royalty payable on all the tenements. Platina can buy back 50% of the net smelter royalty for A$1 million; and
- If tenement E 52/3763 and E 52/3764 are not formally granted, Platina can reduce the final share consideration by A$125,000 per tenement.
Benefits upside
Platina believes the project offers strong upside due to:
- A favourable regional scale structural setting, with the multi-million Mt Olympus gold deposit 7 kilometres to the east;
- Widespread gold mineralisation identified within a large and intense hydrothermal alteration system which extends for more than 10 kilometres in strike extent;
- The host lithology, the Duck Creek dolomite, is a highly reactive rock and favourable host to the target intrusion-related and Carlin styles of gold mineralisation; and
- Immediate targets from surface and at depth within the interpretated east plunging alteration system.
Xanadu comprises seven prospecting licences and five exploration licences covering 498 square kilometres.
Logistics and operations are expected to be low cost with access to the project from the regional mining centre of Paraburdoo, around 38 square kilometres to the north.
In prolific region
Mt Olympus has past production of 350,000 ounces and resources of 1.65 million ounces for a combined 2-million-ounce gold endowment.
Other gold centres in the region include the Paulsens Project of Northern Star Resources Ltd (ASX:NST), 190 kilometres to the northwest, and the 2.1-million-ounce Karlawinda Project of Capricorn Metals Ltd (ASX:CMM) 230 kilometres to the southeast.
The project flanks the Pilbara Craton where gold projects have seen a renewed evaluation following the world-class Hemi gold discovery by De Grey Mining.