Auric Mining Ltd (ASX:AWJ) has made progress on its planned acquisition of rights for gold and other minerals for the highly prospective Chalice West Project in the Widgiemooltha/Norseman region of Western Australia.
The company has completed the first phase of an option agreement with the issuance of shares totalling $400,000 to local geologist John Williams and his wife.
This share issue, at $0.0848 per share, completes the first-year payments to Mineral Business Development Pty Ltd, a company controlled by Williams, which total $675,000 in cash and shares, bringing Auric closer to a planned drilling program scheduled to begin in October.
Auric had previously announced that the acquisition, which includes the project tenement, will be made through a staged series of payments and exploration commitments over a three-year period.
Williams is entitled to a 2% net smelter royalty on all mineral production from the project tenements under the agreement.
Option to proceed
Auric has the option to progress the agreement into a second and third year with further payments of $225,000 in cash or the issuance of 2.25 million Auric shares, whichever is the higher value.
At the end of the third year, Auric has the right to purchase outright all the shares in Mineral Business, including the tenements by paying $2.25 million in cash or Auric shares to the equivalent value.
The option agreement also locks in place direct drilling expenditure commitments by Auric of $200,000 for the coming 12 months and a further $800,000 in exploration over the following two years as the option progresses.
“Mouth-watering concept”
“I’m truly excited about triggering the option agreement,” Auric managing director Mark English said.
“Now we can move ahead with a drilling program at Chalice West. How could you not see it as anything but a mouth-watering concept considering the Chalice Mine is in such proximity to the eastern corner of our main tenement. The Chalice Gold Mine produced almost three-quarters of a million ounces in quick time.
"The geology here is outstanding. We have identified an area for drilling where it mirrors that of the Chalice Gold Mine. We’ll be drilling in the October quarter and are now moving ahead with enthusiasm to get it underway,” he added.
About Chalice West
Auric’s projects in the Widgiemooltha-Norseman area, including the Chalice West Project.
The Chalice West Project covers 15,000 hectares of greenstone terrane that has had limited exploration and defined nickel targets together with strong potential for lithium and rare earths.
The company intends to commence a drilling program testing for analogues to the Chalice Gold Mine, situated just a few kilometres away, where a decade ago, it produced 672,000 ounces of gold over a seven-year period. At today’s gold price, this would produce gross revenue of about $1.5 billion.
Auric is finalising the processes for a heritage survey with the Ngadju people, expected to be completed in August or September this year.