PERTH (miningweekly.com) – ASX-listed junior A1 Consolidated Gold will buy the Walhalla mining tenement, in Victoria, from fellow-listed Orion Gold for A$850 000.

The Walhalla tenement comprises the Eureka and Tubal Cain deposits, which have both previously been mined and had produced gold.

“The acquisition of the Eureka and Tubal Cain deposits at Walhalla helps meet our objective of developing a long-term and sustainable gold mining operation in Victoria.

“We now have over 500 000 oz of gold resource within viable cartage distance of our Maldon mill and expect that narrow-vein, high-grade gold mined from Walhalla will supplement ore currently being mined at the A1 gold mine, near Woods Point and the Union Hill mine at Maldon,” said MD Dennis Clark.

Under the terms of the agreement, A1 would make a A$50 000 cash payment on the execution of a term sheet, while a further 7.81-million fully paid ordinary A1 shares, valued at A$300 000, would be issued to Orion.

The shares would be issued on the completion date of the transaction.

Further, Orion would receive a 2% net smelter royalty on the sale of any gold recovered and sold at the tenement, to a value of A$500 000.

In addition, A1 has granted Orion a put option whereby Orion could, at any time following 36 months from the date of the term sheet, require A1 to buy the net smelter royalty at a price equal to A$500 000, less any royalty already paid.

Orion could also elect to receive this royalty as either cash or shares in A1.

Prior to the completion of the transaction, A1 would also be required to replace the A$180 000 rehabilitation bond that Orion had on deposit with the Department of Economic Development, Jobs, Transport and Resources, in Victoria.

The acquisition of the Walhalla project was subject to a number of conditions, including Ministerial approval.

Clark said that, following the completion of the transaction, A1 would lodge a mining work plan with the Victorian government to provide for the start of narrow-vein underground mining at the already developed Western Adit area within the Eureka deposit.

With access to the proposed mining area already available, initial capital costs for the project were expected to be low.