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Silver Lake sells noncore Murchison tenements

Silver Lake sells noncore Murchison tenements

Photo by Bloombeg

25th November 2015

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – Gold miner Silver Lake Resources entered into two transactions to extract value from its noncore tenements in the Murchison region of Western Australia, the ASX-listed company announced on Wednesday.

In its first transaction, Silver Lake entered into a conditional sales and purchase agreement with fellow-listed Metals X over the Comet asset.

Under that agreement, Metals X would acquire the Comet gold project for A$3-million in cash, subject to Ministerial consent and Foreign Investment Review Board approval.

The Comet gold project covers about 50 km2 of tenement and included the Comet, Comet North and Pinnacles mines, which included the Lunar/Solar prospects. The project is estimated to host about 3.8-million tonnes of ore, at 2.9 g/t gold for 353 000 oz of gold.

Metals X CEO Peter Cook said on Wednesday that the acquisition was a “great value project” for Metals X, which presented an immediate addition to the recently commissioned Central Murchison gold project.

“It has very good underground mining metrics and excellent potential to be a strong and steady contributor to our aggregate gold production in the near term.”

Cook said that Metals X’s immediate focus would be on the Comet mine, which it planned to develop as an underground operation consisting of a current total mineral resource estimate of 1.46-million tonnes, at 4.8 g/t gold for over 225 000 oz.

In addition to the Comet sale, Silver Lake also entered into a farm-in and joint venture (JV) agreement with ASX-listed Musgrave Minerals over the Cue project.

The Cue project consists of the Moyagee gold and the Hollandaire copper projects, which have respective mineral resources of 1.93-million tonnes, grading 2 g/t gold for 126 900 oz of gold, and 2-million tonnes, grading 1.9% copper for 38 800 t of contained copper and 520 000 t, grading 1.35 g/t gold for 22 500 oz of contained gold.

Under that agreement, Musgrave would spend a minimum of A$900 000 on exploration expenditure within the first 12 months of the farm-in agreement, following the issue of A$75 000 in ordinary shares to Silver Lakes at an issue price based on Musgrave’s five-day volume-weighted average price.

To earn an initial 60% interest in the project, Musgrave would have to spend a further A$1.8-million on exploration within a further two years, taking its total spend to this point to A$2.7-million.

On reaching certain milestones at the project area, including the delineation of an additional Joint Ore Reserves Committee-compliant inferred mineral resource of 400 000 oz of gold, or an additional inferred mineral resource of 80 000 t of copper, Musgrave would be required to make a further A$250 000 payment to Silver Lake, in either cash or shares.

On earning a 60% interest in the JV, Musgrave could elect to increase its shareholding to 80% by spending a further A$1.8-million within a further two years.

Once the JV has been formed, the parties would contribute on a pro-rata basis, or face a dilution of their shareholding. If a party’s JV interest fell below 10%, this interest would be converted into a 1.5% net smelter royalty.

On a decision to mine, Musgrave would be required to pay Silver Lake a further A$250 000 in either cash or shares.

Silver Lake MD Luke Tonkin told shareholders that these transactions were consistent with the company’s stated objective of delivering embedded value from its noncore assets.

“Both transactions further enhance the direct and indirect value of Silver Lake’s processing infrastructure in the Murchison as active exploration and mine development emerge in the area. These transactions also reduce Silver Lake’s financial commitment in the Murchison, allowing it to focus resources on its core Mount Monger assets,” Tonkin said.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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