Gold Exploration Joint Venture - Australia
Power Metal Resources plc (LON:POW) the AIM listed metals exploration and development company is pleased to announce the commencement of a new joint venture (“JV”) with Red Rock Resources Plc to build a strategic gold exploration portfolio in Australia (the “Transaction”).
Paul Johnson, Chief Executive Officer of Power Metal Resources plc, commented:
“This strategic move into Australian gold exploration is an important step for POW, complementing our African base metal interests and providing portfolio diversification by commodity and jurisdiction.
Australian gold exploration and development projects are attracting considerable interest especially in the Victorian goldfields following the remarkable discoveries at depth at the Fosterville mine, where in Q1 2020 Kirkland Lake produced 159,864 oz Au at 42.4g/t.
Historic mining in the Victoria Goldfields has been alluvial or at shallow depths and they have been underexplored in modern times. I am delighted that, simultaneously with the launch of this Joint Venture, we have been able to lodge an application for an exploration licence forming the Blue Whale project near to the producing Ballarat gold mine in Victoria.
The Blue Whale project is the Company’s first project in Australia, and opens the door for the potential establishment of an Australian gold portfolio. In this regard, we expect to provide further updates on Blue Whale and additional opportunities in the near future.”
- POW to pay license application expenses to date amounting to A$2,159 (£1,125) to become a 49.9% shareholder in Red Rock Australasia Pty Limited (“ProjectCo”), a wholly owned and currently non-operating exploration subsidiary of London listed Red Rock Resources plc (LON:RRR) (“Red Rock”);
- ProjectCo to be renamed to reflect the new business identity and may acquire further high-profile gold exploration and development projects in Australia;
- The ProjectCo has submitted an application for an exploration license area EL007271 of approximately 130 sq km in Victoria, Australia;
- The new licence application is located in the south-western portion of the Victoria Goldfields, 120km northwest of Melbourne and adjacent to the producing Ballarat gold mine owned and operated by Castlemaine Goldfields Pty Limited, a wholly owned subsidiary of Singapore based Liongold Corporation; to the North of the Ballarat mine at Creswick are tenements owned by ECR Minerals (AIM:ECR);
- The Ballarat mine is currently producing 40,000oz Au a year at an average grade of 5.6g/t Au from underground mining and has historically produced over 13 million ounces of gold mainly derived from alluvial mines;1
- The Ballarat area produced over 160t of gold between 1851 and 1917 (88 alluvial and 72 hard rock); within this, Ballarat East produced 47t at 10 g/t between 1857 and 1917;2
- Ballarat East mining took place along a 16km 800m wide NNE trend from Black Hill in the North to Buningong in the South, and the application covers the southern extension along strike of this trend;
- The former EL 4996 tenement, the boundaries of which the current license application follows with limited amendments, has historically produced 112,055 oz gold (102,641 oz alluvial, 9,444 oz hard rock from shallow mining); 3
- Paul Johnson, Chief Executive Officer of POW is to join the board of ProjectCo, and POW and Red Rock will be joint operators of the Blue Whale project and will contribute to the funding requirements of ProjectCo in line with shareholdings.
- Finlay I.S. and Douglas P.M. 1992, Ballarat 1:100,000 mines and deep lead map geological report, Geological Survey of Victoria Report 94
- Open File Report for Navarre Discovery No.1 Pty Ltd by Dr Allison Dugdale of Geological Research Services, 10.9.09, “Exploration Potential of EL 4996”, citing Geological Survey of Victoria database and summing individual mines’ production, noting considerable number to east of license where no production records exist.
Related Party Transaction
Andrew Bell, Chairman of POW, is also Chairman and Chief Executive Officer of Red Rock Resources plc and therefore a Related Party under the AIM Rules for Companies. The Transaction constitutes a related party transaction pursuant to Rule 13 of the AIM Rules for Companies.
Having reviewed the Transaction, the directors of POW, other than Andrew Bell who is precluded from opining, having consulted with SP Angel, the Company's nominated adviser, consider the Transaction to be fair and reasonable insofar as POW shareholders are concerned.
Red Rock has previously extended loans to the ProjectCo which currently sit as a creditor in the ProjectCo balance sheet and amount as the last reported balance sheet date at A$386,086 (£201,171). The amount due to Red Rock will be subordinated to any further loans advanced to the ProjectCo by Red Rock or POW in respect of the JV.
The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.
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