THE BOURSE WHISPERER: Chalice Gold Mines (ASX: CHN) has made two transactions as part of the execution of a second leg of the company’s corporate strategy of targeting high-quality, drill ready targets in prospective low risk mineral provinces.
Chalice said the first deal provides the company exposure to GeoCrsytal’s Webb diamond project in Western Australia, which it considers to have potential to be a large kimberlite field, via a 10.1 per cent placement plus options to earn up to 19.9 per cent.
The second deal gives Chalice the right to earn up to 70 per cent of both the Oodnadatta and Marla projects in South Australia, in an iron oxide-copper-gold-uranium (IOCGU) province, by funding $5.5 million.
Marla and Oodnadatta location map. Source: Company announcement
Both deals have drill ready targets, with drilling expected to commence at the Webb diamond project shortly, and on high priority IOCG targets at the Marla Project in the October quarter 2013.
Chalice explained it is targeting high-quality mining projects with strong cash flow generation potential with its primary focus on securing a cornerstone asset, leveraging off its cash position of approximately $57 million following the sale of the Zara gold project in Eritrea late last year.
The company said it has made good progress in reviewing and prioritising robust, lower risk projects for further evaluation.
“Whilst our search for a cornerstone asset is progressing well, where we have definitely seen the quality of opportunities available improving significantly over the last six months, the Board has approved a second leg to Chalice’s strategy in order to take advantage of the ongoing tightness in the equity markets and the decline in drilling costs, by targeting a limited number of high-quality, ‘drill ready’ exploration opportunities on a deal by deal basis,” Chalice Gold Mines managing director Bill Bent said in the company’s announcement to the Australian Securities Exchange.
“There is a unique opportunity in the market at the moment to gain exposure to some of the best and most prolific mineral provinces in Australia and other low risk jurisdictions, with a clear pathway to a controlling position, without significantly impacting our cash position or limiting our ability to execute on our primary strategy of acquiring a cornerstone asset.
“The transactions we are announcing today provide Chalice shareholders exposure to two high-quality exploration plays, both with potential to host world class deposits, for an initial funding commitment of $500,000 via a placement in GeoCrystal Limited to explore the Webb diamond project, and a non-binding commitment of $800,000 with Uranium Equities Limited to undertake the first phase of exploration on the Oodnadatta and Marla IOCGU projects.”