Ardea Resources and Red 5 Limited Combine to Enhance Promising Gold Tenure

THE BOURSE WHISPERER: Ardea Resources (ASX: ARL) and Red 5 Limited (ASX: RED) have struck a Joint Venture Agreement in two of the former’s prospective gold exploration projects located in close proximity to the latter’s Darlot gold mine in the Eastern Goldfields region of Western Australia.

Adrea Resources declared the JV (ARL 20% / RED 80%) was part of its strategy to prioritise exploration and development work on the company’s Kalgoorlie Nickel Project (KNP) tenure.

For its part, Red 5 declared the Farm-in JV Agreement supports its multi-strand strategy to expand the Darlot Mineral Resource base, which includes regional ‘bolt-on’ acquisitions, such as the two prospects in question, in addition to comprehensive exploration being undertaken as part of the Darlot Mining Hub Strategy.

Red 5 can earn up to an 80 per cent interest in Ardea’s Mt Zephyr and Darlot East gold projects, through its 100 per cent-owned subsidiary, Darlot Mining Company Pty Ltd, that is required to spend $1.5 million within a 2-year period to earn an initial 60 per cent interest in the tenements.

Should this be achieved, Darlot may then elect to spend an additional $800,000 to earn an additional 20 per cent interest, for a total 80 per cent earned interest in the tenements.

Ardea is free carried by Darlot up to a Decision to Mine, after which it may elect to contribute pro-rata or dilute.

Should Ardea’s diluted interest falls below 10 per cent, it will convert to a 1.5 per cent Net Smelter Royalty (NSR).

The Mt Zephyr project covers an area of 900 square kilometres and is considered by Red 5 to represent an excellent gold discovery opportunity, located within 100 kilometres trucking distance from the Darlot Mill.

Mt Zephyr hosts several areas of known mineralisation, including the Dunn’s Find prospect (gold associated with Banded Iron Formation) and the Gale prospect (gold associated with granodiorite intrusion), which Red 5 considers to demonstrate early-stage similarities to its 4.1 million ounces King of the Hills (KOTH) gold deposit.

The Darlot East project comprises two Exploration Licences in an under-explored area located eight kilometres to the east of the Darlot Mine.

“Following the recent delivery of the Final Feasibility Study for the development of a bulk mining and processing operation at King of the Hills, Red 5’s growth vision is based on the establishment of two separate production hubs at KOTH and Darlot,” Red 5 managing director Mark Williams said in the company’s ASX announcement.

“This Joint Venture Farm-in Agreement with Ardea Resources provides an exciting opportunity for the discovery of gold resources within economic haulage distance of the Darlot processing plant, which is currently operating at one million tonnes per annum throughput.

“Ardea’s grassroots exploration programs have delineated a series of highly-prospective targets, including the high-priority Gale prospect, which shows interesting early-stage analogies to our 4.1 million ounces KOTH deposit.

“Red 5 now has a combined granted tenement footprint of 1,919 square kilometres in Western Australia’s Eastern Goldfields (including 423km2 under application), giving us a commanding position in this world-class gold district and an exceptionally strong growth pipeline of exploration projects.

“We are looking forward to getting on the ground to commence drilling and exploration programs at both the Mt Zephyr and East Darlot projects.”