Australian gold miner Red 5 has exercised an option to buy gold deposits 10 km north of its Darlot mine, in Western Australia.
The deposits - Cables and Mission - were last reported by Leopard Resources to host an inferred resource of 185 000 oz.
The value of the acquisition is A$2-million, with a A$500 000 deferred payment on delineation and reporting of a 500 000 oz resource.
Red 5 has so far confirmed mineralisation through reverse circulation drilling, as part of its due diligence for the acquisition, with intercepts including 7 m grading 5.7 g/t gold, 4 m grading 14.7 g/t gold and 5 m grading 3.7 g/t gold.
Red 5 says the gold mineralisation in the Cables and Mission deposits has similar dolerite units to those that host the Centenary orebody at the Darlot mine.
The company states that the “bolt-on” acquisition forms part of Red 5’s multi-strand strategy to expand the Darlot mineral resource base, which includes ongoing near-mine and regional exploration, as well as consolidation of strategic opportunities.
Red 5 recently acquired the Great Western gold deposit, which is further south of the Darlot mine.
The acquisition for the Cables and Mission deposits involves an option and sub-lease agreement with the vendor, Andrew Paterson, for the right to acquire a sub-lease over the 13 blocks of exploration licence totalling an area of 38.7 km2.
The payment entails Red 5’s subsidiary Darlot Mining Company (DMC) paying an option fee of $150 000 for a six-month option in December, following which DMC elected to exercise its option to enter into the sub-lease.
In exchange for the sub-lease, Red 5 will issue $1.85-million in shares to Paterson, as well as pay $500 000 in cash or shares upon the company’s reporting of a 500 000 oz resource.
Red 5 anticipates completing the sub-lease transaction on or before May 29, which will grant DMC the exclusive right to explore and mine the area.
The company plans to undertake additional drilling programmes and other feasibility activities to issue a Joint Ore Reserves Committee-compliant mineral resource as soon as possible.