THE BOURSE WHISPERER: MOD Resources has reached an agreement with Oceana Gold (New Zealand), a wholly owned subsidiary of Oceana Gold Corporation.
The agreement will result in MOD, through its 100 per cent-owned New Zealand subsidiary Sams Creek Gold, earn up to 80 per cent of New Zealand’s largest undeveloped gold deposit, Sams Creek, located near the South Island town of Nelson.
MOD described Sams Creek as an intrusive-related gold deposit with an existing JORC compliant inferred mineral resource of 770,000 ounces of gold, based on 13.5 million tonnes grading 1.78 grams per tonne using a 0.70 grams per tonne cut-off.
According to the company the 770,000 ounce gold resource at Sams Creek extends from the surface and remains open along strike and down dip.
The resource is all contained within the Main Zone prospect at Sams Creek, which covers less than 10 per cent of the known six kilometre strike length.
“I have always believed that Sams Creek had the potential to host a very significant gold deposit,” MOD Resources chairman Miles Kennedy said in the company’s announcement to the Australian Securities exchange.
“There is obvious scope for an increase in the resource, both within the Main Zone prospect where the existing 770,000 ounce resource has been defined and the various other targets along the six kilometres of strike.”
Under the terms of the Joint Venture agreement with OceanaGold, MOD Resources can earn, with appropriate consents, up to 80 per cent of Sams Creek by sole funding staged exploration programs.
Once the 80 per cent mark has been achieved, both companies will contribute pro rata.
Stage one will entail MOD Resources commencing a $1.9 million diamond drilling program in line with a work program approved for Sams Creek by New Zealand Petroleum & Minerals in June 2010.
The initial work program will also include an aeromagnetic survey and a LIDAR high resolution topographic survey.
The JV also contains benchmarks for MOD Resources to earn staged interests of 40 per cent and 60 per cent in the permit.
Total future consideration payable by MOD Resources to OceanaGold will be between 10 million and 17 million ordinary MOD Resources shares, conditional on future benchmarks being achieved and MOD Resources obtaining shareholder approvals or other regulatory approvals as may be necessary.