Chase Mining Corporation Ltd (ASX:CML) has undertaken a $1 million private placement and has in the pipeline a share purchase plan (SPP) to fund its just announced proposed acquisitions of the Hawkwood Project along with Prophet Resources and its tenements.
These acquisitions will enhance the company's holding in mineral-rich regions of Queensland.
The company has entered into an option agreement under a Binding Term Sheet to acquire 100% of Prophet Resources Pty Ltd, which holds six granted exploration permits for minerals (EPMs) covering more than 500 square kilometres and two EPM applications.
There are no quantified mineral resources within the tenements, however, they have collective exploration potential for gold, copper, zinc, lead, silver, cobalt, bauxite and base metal mineralisation.
Further, Prophet's 90%-controlled company Mt Morgan Exploration Pty Ltd holds one granted EPM covering a very prospective area covering 123 square kilometres southeast of the famous historic Mount Morgan gold-copper mine.
Hawkwood Project
Chase Mining has also entered into an earn-in and joint venture agreement with unlisted junior explorer Auburn Resources Ltd (AUB), whereby it can acquire up to 90% of a district-scale granted tenement holding of around 1,680 square kilometres about 55 kilometres west of Mundubbera, southern Queensland.
The tenement holding consists of 13 granted EPMs, known as the Hawkwood Project.
This earn-in and JV is in keeping with CML’s strategy of acquiring highly prospective tenements on favourable terms within a single jurisdiction.
Chase Mining already has exposure in Queensland through its 40% holding in private exploration company Red Fox Pty Ltd.
The deal provides a strategic opportunity to enable the accelerated exploration and development of the Hawkwood Project by Chase Mining, while AUB concentrates on its flagship projects at Calgoa and South Nicholson in Queensland and Tanumbirini and Victoria River Downs in the Northern Territory.
The Hawkwood Project has unproven geological potential for magmatic nickel-copper-cobalt-PGE sulphide mineralisation associated with mafic and ultramafic intrusive complexes.
There is also geological potential for porphyry copper-molybdenum-gold mineralisation and epithermal gold occurrences, but there has been limited detailed exploration undertaken at the project to date and there are no known mineral resources.
Proposed exploration
During Phase 1 of the option period, appointed operator DGR Global will undertake a defined exploration program.
Pending equipment and contractor availability, this will include ground EM surveys followed by drill testing of any anomalies generated for sulphide mineralisation.
The key commercial terms are:
➢ Chase Mining will spend $500,000 over 12 months on an exploration program for the Hawkwood Project (Stage 1). DGR Global will undertake the program and be entitled to a management fee of 5% of the amount spent.
➢ At the end of Stage 1, Chase Mining may elect to spend a further $2 million on exploration over 12 months (Stage 2). Upon completing Stage 2, CML will have earnt a 51% interest in the project tenements and associated assets. It may at its election undertake the program and be entitled to a management fee of 5% of the amount spent.
➢ Chase Mining may elect to spend a further $2 million on exploration over 12 months (Stage 3). Upon completing Stage 3, CML will have earned a further 24% interest (for a total of 75% interest) in the project tenements and associated assets. CML may at its election undertake the program and be entitled to a management fee of 5% of the amount spent. Upon completing Stage 3 and subject to the next stage, both parties will manage and fund the project in accordance with their respective joint venture interests.
➢ AUB has the right, for a period of 30 days following Chase Mining earning a 75% interest, to sell a further 15% interest for Chase Mining fully paid ordinary shares with a total value of $2 million at an issue price equal to the then 30-day VWAP. If exercised and its interest is reduced to 10%, AUB is free carried to a decision to mine.
Prophet Resources tenements
With the Prophet Resources tenements, Chase Mining’s immediate interest is EPM 27001 (Croydon North) where the target is primarily for untested gold mineralisation potential under shallow cover associated with a major structural junction evidenced in regional magnetic data within a coincident embayment of a gravity high.
Prophet Resources has recently undertaken a ground Sub-Audio Magnetics (SAM) survey over the structural junction area and the data is being interpreted and assessed.
Any prospective targets generated will then be ranked with the intention of drill testing priority targets using funding from Chase Mining under the option agreement terms.
Pending worthy targets being generated from the SAM survey and availability of equipment and contractors, weather and access conditions, the drilling is planned for November 2021.
Key commercial terms
The Binding Term Sheet gives Chase Mining the option to acquire 100% of Prophet Resources, subject to $250,000 funding (Stage 1 commitment) on an exploration work program mutually agreed to, including but not limited to field work, geophysical surveys, drilling program(s) assaying and processing of data.
Up to $60,000 of the $250,000 may be allocated to refunding payment of the current North Croydon SAM survey program activities, its interpretation and reporting.
Chase Mining will have the earlier of two-months after receipt of the final assays and delivery of final technical reports from its-funded exploration program(s) by Prophet Resources and April 1, 2022 to elect to acquire Prophet Resources.
If the election is made, Chase Mining will:
➢ Issue to the vendors 60 million shares, plus pay $330,000 cash;
➢ Commit to providing 1.5% net smelter return (NSR) royalty deeds for each of the tenements, except the Ina Bauxite Project where the royalty will be a $1/tonne. If Chase Mining elects not to continue to Stage 2 for any reason the Term Sheet will terminate and the company will have no interest in Prophet Resources or its assets.
Placement
The company has received firm and binding commitments from sophisticated and professional investors to raise $1 million through the issue of 62.5 million new fully paid ordinary shares at $0.016 per share.
Of the total, 56.25 million shares will be issued without shareholder approval using the company’s capacity under Listing Rule 7.1 and Listing Rule 7.1A, and a further 6.25 million ordinary shares will be issued to director Dr Leon Pretorius, following shareholder approval.
Funds raised from the placement will go towards the committed expenditure on the announced option agreements entered into on the Hawkwood Project and Prophet Resources tenements and working capital requirements.
Share purchase plan
The company is also conducting a share purchase plan (SPP) at $0.016 per share, which is an 8% discount to the Volume Weighted Average Market Price (VWAP) over the last five days on which sales of shares are recorded prior to the announcement of the SPP to ASX on October 27, 2021.
Under the SPP, eligible shareholders, being those with registered address in Australia or New Zealand on October 26, 2021, can subscribe for up to $30,000 worth of new fully paid ordinary shares without incurring brokerage or transaction costs.