Southern Cross to acquire two deposits
THE BOURSE WHISPERER: Southern Cross Goldfields has entered into an option agreement with unlisted company Barranco Resources to acquire two oxide gold deposits.
The two deposits, Red Legs and Die Hardy, are located 30 kilometres north of Southern Cross’ Marda gold project in Western Australia.
Together they comprise total JORC Inferred Resources of 1.7 million tonnes grading 2.5 grams per tonne gold for 140,000 ounces of contained gold.
The acquisition of the two deposits has the potential to increase the Southern Cross gold resource inventory by 30% to approximately 600,000oz contained gold.
The agreement with Barranco follows other consolidation activities Southern Cross has entered into this year, including:
– Acquisition of gold and other non-iron mineral rights on Radar Iron’s tenement package surrounding Southern Cross’ Copper Bore project;
– Acquisition of gold and all other mineral rights on Renaissance Mineral’s tenement package near Southern Cross and a farm-in agreement at its historic high-grade Radio gold mine; and
– An agreement with Western Areas for it to acquire 70% of Southern Cross’ nickel rights.
Under the terms of the latest agreement the option may be extended for periods of six months over a two year period at a cost $20,000 per extension.
Should Southern Cross opt to exercise the option it will pay $0.5 million in cash and issue 20 million shares to Barranco.
The agreement covers two Retention Licences (RL’s) covering the Red Legs and Die Hardy deposits.
Once it exercises the option Southern Cross will hold all mineral rights to the RL’s including Barranco’s existing royalty over the Mt. King deposit, which is owned by Southern Cross.
“This is another important step forward for the company in terms of consolidating our regional resource position and strengthening the future production potential of the Marda gold project,” Southern Cross Goldfields managing director Glenn Jardine said in the company’s announcement to the Australian Securities Exchange.
The new option agreement replaces a previous agreement Southern Cross had with Barranco which was included in the company’s original 2008 Prospectus.
That earlier option agreement was allowed to lapse due to uncertainty surrounding the boundary of the proposed Mt. Manning Nature Reserve.
That uncertainty has now been rectified and according to Southern Cross its current gold production strategy, drilling results at its other gold deposits have combined with improved market conditions in the gold sector to justify re-establishing the option.
“We intend to ascertain the production potential of the Red Legs and Die Hardy deposits in the near future by upgrading the resource confidence levels from their current JORC Inferred classification to Indicated or Measured classifications through a targeted drilling program”, Jardine said.
“Southern Cross Goldfields now holds gold rights to over 2,000 square kilometres in the Marda region alone with dominant coverage along the Evanston shear zone and the Andromeda and Copper Bore trends where significant gold mineralisation has previously been identified.
“Following the success of recent drilling programmes and consolidation activities the company has instigated a comprehensive review of the gold prospectivity of the district.”