Cosmo Metals to acquire Kanowna gold project

Cosmo Metals (ASX:CMO) has signed a term sheet to acquire La Zarza Minerals — the holder of the Kanowna gold project (KGP) in WA.

The KGP lies 1km west of Northern Star Resources’ Kanowna Belle gold operations which has produced more than 5.4moz of gold since 1993 and has a current production rate of 150kozpa.

It comprises of 12 prospecting licences and is situated in the Eastern Goldfields of WA, one of the world’s most prolifically well-endowed gold producing regions.

The KGP includes drill ready targets at Don Álvaro, Laguna Verde and WKL with multiple additional surface and shallow air core anomalies that are yet to be tested. These targets have been lightly tested with up to 30.6g/t gold intersected.

Cosmo managing director James Merrillees says the execution of the term sheet represents an exciting opportunity for the company.

“The potential at the KGP is compelling with proven gold mineralisation adjacent to the world-class Kanowna Belle deposit including headline drill intercepts of 18m @ 5.3g/t gold and 10m @ 4.7g/t gold,” he said.

“Drill-ready targets have already been identified with this association at Don Álvaro, Laguna Verde and WKL, along with numerous shallow air core intersections that have never been followed up.

“The acquisition of the Kanowna gold project will complement the company’s existing base metals and lithium portfolio at Yamarna and is a low-cost entry into the prolific Eastern Goldfields adjacent to world-class projects with exceptional infrastructure.”

Cosmo will acquire La Zarza Minerals for $200k upfront cash (which includes a $50k exclusivity fee already paid), 8m Cosmo shares (valued at $400k) and $200k cash payment to be made within six months.

Cosmo will also receive a 0.5% net smelter royalty over gold won from the project tenements.

Following completion of due diligence in February, Cosmo Metals expects to immediately begin exploration at the KGP with up to 2000m of reverse circulation drilling planned to test high-priority targets.

Cosmo Metals has also received binding commitments to raise $300k via a private placement. A total of 6m new fully paid ordinary shares will be issued at a price of five cents per share.

The money will be used to fund part of the acquisition and due diligence, and undertake initial exploration and drill planning at the KGP.