Phoenix agrees to Red Dam purchase

THE BOURSE WHISPERER: Phoenix Gold has reached an agreement with Carbine Resources to purchase a 100 per cent interest in Carbine’s Red Dam gold project in Western Australia.

The Red Dam project is located immediately adjacent to Phoenix’s Broads Dam and Carbine projects and covers in excess of 270 hectares.

Carbine has quoted Red Dam as containing over 147,000 ounces of gold at 2.5 grams per tonne.

The most recent drilling program to be carried out on the project was conducted in 2007.

Results from this drilling contained significant intercepts from both infill drilling and drilling outside the existing mineralised envelope.

These results were published by Carbine in July 2007 and included:

–    5 metres at 44.07 grams per tonne gold from 32 metres;

–    14m at 8.27g/t gold from 97m;
 
–    18m at 4.88g/t gold from 76;
 
–    10 at 5.29g/t gold from 138;
 
–    9m at 5.73g/t gold from 49m; and
 
–    10m at 4.45g/t gold from 111m;

“The Red Dam resource sits near the convergence points of the region’s main shear zones and the potential to grow this Resource significantly has been demonstrated by the high grade intercepts outside the current resource envelope,” Phoenix Gold managing director Jon Price said in the company’s announcement to the Australian Securities Exchange.

“We are very excited about getting additional drilling going and growing the project along strike and at depth.”

Carbine has agreed to sell Red Dam to Phoenix for the following consideration:

–    $50,000 non-refundable cash deposit on signing formal agreement;

–    $50,000 cash payable at settlement;

–    eight million fully paid ordinary Phoenix Gold shares (at a deemed price of $0.23); and

–    $10 per ounce gross production royalty.

Phoenix said that the two companies expect to execute and complete a Formal Sale Agreement by December 2012 subject to any shareholder, government and regulatory approvals that may be required.

Phoenix has commenced planning and approvals work for a 5,000 metre drill program to test extensional targets as well as complete some validation drilling.

The company anticipates this will commence early in the March Quarter 2012.

“This acquisition continues Phoenix’s strategy of consolidating highly prospective tenure along these world class shear zones,” Price said.

“Red Dam has met all the selection criteria and will complement our adjacent projects at Broads Dam and Carbine.
 
“We welcome Carbine Resources as shareholders as they focus on their projects in Africa and look forward to creating further value from this exciting area for all our shareholders.”