WELL-funded explorer Sovereign Gold will aquire unlisted company Gossan Hill and its several advanced gold prospects in NSW for $700,000.
The three project areas within eight exploration licenses would provide Sovereign with an expanded exploration footprint in the state.
Sovereign said the Gossan Hill prospects were centred on known gold occurrences – some with historic production – and contained more than 20 quality, untested targets.
The acquisition price comprised $200,000 in cash and $500,000 in scrip (two million ordinary shares at $0.25 per share) which the company said “compares very favourably to recent peer transactions”.
The newly acquired Hobbs deposit at Mt Adrah – which contains a JORC resource of 239,000oz grading 1.13 grams per tonne gold to a depth of 120m – could enable rapid resource growth for the company.
According to Sovereign, a 313m vertical drill hole at the deposit had returned continuous gold at 1.43g/t gold; the company said a simple extrapolation suggested a resource upgrade to 540,000oz and the potential for subsequent upgrades to 1.7 million ounces.
“Coupled with existing projects, Sovereign is now a well-positioned high-growth gold exploration company with multimillion ounce resource potential over the medium term,” Sovereign managing director Michael Leu said.
“The acquisition of the Mt Adrah project, which has a 0.5 to 2moz exploration target, reinforces the strategy to transition to a ‘multimillion ounce mid-tier gold developer in the medium term’,” he said.
Sovereign has a strategic relationship with Chinese state-owned enterprise, Jiangsu Geology and Engineering Company, which has committed significant funding totalling $21 million during the next two years.
The explorer would use this support to continue its aggressive drilling program at the flagship Martins Shaft project, where there is a substantial 0.5 to 2moz exploration target.
The company is targeting a JORC resource in the fourth quarter of 2013.