Heads of Agreement signed on Bullabulling Gold Project
February 11 2010 - 3:11AM
UK Regulatory
TIDMGGG
Central China Goldfields plc ("the Company")
Heads of Agreement signed with Auzex Resources Limited
Option to Joint Venture Bullabulling Gold Property
11 February 2010
Central China Goldfields plc is pleased to announce that it has signed a Heads
of Agreement with Auzex Resources Limited ("Auzex") (AZX.ASX) which provides an
exclusive option to joint venture, with Auzex, the Bullabulling Gold Property
in the Coolgardie Goldfield, Western Australia ("Bullabulling"). The terms of
the signed Heads of Agreement are as follows:
* The Company will subscribe for a A$1.5 million placement in Auzex at A$0.25
per share ("the Placement") for an exclusive option over the Bullabulling
gold property until 7 April 2010.
* Under the Placement, the Company will be issued with 1.5 million shares
immediately and a convertible note with a face value of A$1.125m which will
convert into 4.5 million Auzex shares at such time as Auzex obtains the
requisite authority to issue such shares at a General Meeting of Auzex
("the Note"). Following completion of the Placement, and upon exercise of
the Note, the Company will own 12.9 per cent. of Auzex's issued share
capital.
* Consideration for the Placement is to be satisfied by payment of A$500,000
in cash and the issuance of 14,044,944 shares in Central China Goldfields
plc at 4 pence per share by the Company to Auzex. Application for the new
shares to be admitted to AIM has been made and this is expected to occur on
17 February 2010 . Following the allotment of the new shares in the Company
Auzex will hold approximately 7.1 per cent. of the Company's issued share
capital.
* Assuming completion of satisfactory due diligence, Central China Goldfields
plc will pay A$2.5 million to Auzex to exercise the option at the end of or
within the option period, to earn a 50% interest in the Bullabulling
Property.
* The A$ 2.5 million will be used at Bullabulling, in part, to replace the
security bonds for the mining tenements (approximately A$ 1.25 million) and
also to pay up to A$ 800,000 for existing building, plant and machinery at
Bullabulling.
* Upon exercise of the option, the development of Bullabulling will be
governed by a Joint Venture Agreement between the Company and Auzex. It is
envisaged that feasibility and development expenditure for Bullabulling,
will be jointly funded on presentation of a budget. If either party should
elect not to contribute, then they will be diluted on a straight line
basis, using an initial valuation of A$5 million.
* The majority owner of Bullabulling will manage the joint venture. In the
event of 50:50 ownership and no clear majority, a management committee will
be set up to represent the interests of both parties.
Bullabulling Gold Property
The Bullabulling project straddles the Great Eastern Highway, 70km south west
of Kalgoorlie in Western Australia. The property consists of a sizeable land
holding (60km2) consisting of a series of licences and granted mining leases
covering typical Eastern Goldfields gold-bearing greenstone stratigraphy.
Previous shallow mining (mainly <20m from surface) over the exposed 14
kilometre strike of the mineralised horizon, has produced some 371,500 ounces
of gold from more than six open pit mines, developed in surficial lateritic and
saprolitic ores.
Bullabulling, originally held by Samantha and latterly by Jervois Mining, has a
significant drill hole database with over 36km of drilling completed. However,
with an average drill hole depth of only 34m, the deposit has not been tested
at depth and remains open along strike in several areas.
In 1998 Samantha estimated a JORC rated Measured and Indicated Resource of
9.3Mt @ 1.44g/t Au (430,000oz of gold) by using a gold price assumption of
A$600/oz. Re-optimisation of this resource at a price closer to today's much
higher gold price is expected to lead to an improvement on these figures.
The Bullabulling project consists of:
Resource Category Tonnes Grade g/t Au Contained Gold oz.
Measured 4,865,000 1.51 237,000
Indicated 4,159,000 1.35 180,800
Inferred 284,000 1.52 13,900
TOTAL 9,308,000 1.44 431,600*
JORC compliant as at 1998.
A number of higher grade intersections remain to be followed up, including 9m @
10.5g/t Au at Hobbit pit, 9m @ 11.9g/t Au at Edwards and 7m @ 77g/t Au at
Bacchus. With minimal exploration work carried out on the property since 2000,
computerisation and modelling of the entire Bullabulling database is expected
to increase the geological knowledge of the property and to yield new drill
targets.
The terms of Auzex's agreement with Jervois Mining to acquire 100% of
Bullabulling include replacement of the environmental bond and a royalty
payment of A$30 per ounce for the first 400,000 oz. of gold produced followed
by A$20 per ounce thereafter.
Assuming satisfactory due diligence and exercise of the option, Central China
Goldfields plc and Auzex will fast track the property to a bankable feasibility
stage , within a twelve to eighteen months timeframe, at an estimated cost of
circa A$2.0-2.5 million over and above the payments envisaged above to secure
the option and 50% interest in Bullabulling. With high gold recoveries and
excellent infrastructure, the partners plan to move towards early mining and
development of the property.
Peter Ruxton Chairman of Central China Goldfields plc comments on the
transaction
"The Bullabulling gold project represents a "Cornerstone" opportunity for the
future of the Company and its shareholders.
From this point on we aim to grow Central China Goldfields plc using a twin
track approach of early gold production and increasing the size of the asset
through focused exploration with the aim of creating a medium sized producer
over the next few years.
The obvious potential of the Bullabulling gold project is its historic JORC
431,600 gold ounces estimated when the price of gold was much lower than is
currently the case, the open pit nature of the deposit, the absence of any
substantial overburden, proximity to good infrastructure and an available
experienced work force; these factors all bode well for bringing this project
on stream quickly over the coming years.
We therefore look forward, with our new partner Auzex, to generating
significant shareholder value through this exciting first step in building the
company organically."
The technical information in this news release is based on the information
provided by Auzex Resources Limited compiled by John Lawton who is a member of
The Australasian Institute of Mining and Metallurgy. He is fulltime employee of
Auzex and has sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity
which he is undertaking to qualify as a Competent Person as defined in the 2004
Edition of the "Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves." John Lawton consents to the inclusion in the
report of the matters based on this information in the form and content in
which it appears."
For further information, please contact:
Central China Goldfields plc Westhouse Securities Limited
Dr. Jeffrey Malaihollo Tim Metcalfe / Martin Davison
Tel: 020 7621 0200 Tel: 020 7601 6100
Email: info@ccgoldfields.com
www.ccgoldfields.com Alexander David Securities
Limited
Nick Bealer / David Scott
Tel: 020 7448 9820
END
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