PERTH, WESTERN AUSTRALIA--(Marketwire - Oct. 5, 2011) - Magma Metals Limited (News - Market indicators)(ASX:MMW) ("Magma" or the "Company") is pleased to advise that it has applied for additional tenements and entered into agreements on two tenement groups, Lake Magenta and Pingrup, which are contiguous with the Lake Grace gold project, located 320 km southeast of Perth in Western Australia.
An interpretation of the geology of the project area is in progress based on an analysis of historical exploration records, interpretation of aeromagnetic data and Magma's own field reconnaissance. This analysis has identified large coherent domains containing mafic enclaves, which are believed to be prospective for gold. The Griffins Find, Lake Magenta and Hardies gold prospect areas all occur in these domains (Figure 1).
Magma has extended the area of its potential ground holding in the region based on this interpretation. Following these additions, Magma's interests now cover a strike length of approximately 240 km of the gneiss belt which hosts the Griffins Find gold deposits, an area of approximately 10,500 km2. This area is comparable in size to Ausgold Limited's Boddington South gold project, which is adjacent to the west.
The principal terms of the two agreements are as follows:
Lake Magenta Option:
- Magma will have an exclusive five year option to acquire a 100% interest in the Lake Magenta tenement for $0.5 million in cash.
- Magma will pay the vendor $25,000 for exploration data.
- If Magma exercises the option, it will grant the vendor a $1/tonne production royalty capped at $1 million.
- Magma may withdraw from the option agreement at any time.
Pingrup Joint Venture:
- Magma will spend $0.5 million on the project tenements within five years to earn a 60% interest in the project.
- Magma will pay the vendors $10,000 for exploration data.
- The vendors may elect to contribute to JV expenditure or allow Magma to earn a further 30% by spending an additional $0.5 million on the tenements. The vendors 10% interest will be convertible to a 1% net smelter returns royalty.
- Magma may withdraw from the option agreement at any time.
The agreements are subject to a number of conditions including execution of formal legal option and joint venture agreements.
The gneiss belt, which is mainly under soil cover in a wheat farming district, has had little modern systematic exploration coverage. While the focus of exploration work will be on the Griffins Find area and other areas of known gold mineralization, systematic regional reconnaissance work is planned to investigate the gold potential of the broader project area, particularly within the domains containing mafic enclaves (Figure 1).
To view Figure 1, please visit the following link: http://media3.marketwire.com/docs/mmw1005fig1.pdf.
Competent & Qualified Persons' Statement
The information in this report that relates to Exploration Results or Mineral Resources is based on information compiled, reviewed or prepared by Dr Keith Watkins and Mr Ralph Porter, the Managing Director and General Manager Exploration – Australia of Magma Metals Limited, respectively. Dr Watkins is a Fellow of the Australian Institute of Geoscientists and is a "qualified person" as such term is defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects. Both Dr Watkins and Mr Porter are Members of the Australasian Institute of Mining and Metallurgy and have sufficient experience, which is relevant to the style of mineralization and type of deposit under consideration and to the activities undertaken to qualify as Competent Persons as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code). Dr Watkins and Mr Porter consent to the inclusion in the report of the matters based on this information in the form and context in which they appear.
Cautionary Statement
Certain information contained in this report constitutes "forward-looking information" under Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", "is expected", "estimates", "intends", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Although management believes that the expectations expressed in such forward-looking information disclosed herein are based on reasonable assumptions, these statements are not guarantees of future performance. A number of factors could cause actual results, performance or achievements to differ materially from those in the forward-looking information. Such factors include future metal prices, exploration and evaluation results, future availability of capital and general economic, market or business conditions, government regulation of mining operations, failure of equipment or processes to operate as anticipated, risks inherent in mineral exploration and development including unusual or unexpected geological formations. Descriptions of these risks can be found in the Company's various statutory reports, including its Annual Information Form available on its website at www.magmametals.com.au and on the SEDAR website at www.sedar.com.
ABN 72 114 581 047
