5da0e174-8736-4d7a-abca-71fdd1ddf7c1.pdf
ASX RELEASE 25 November 2015
ASX: MGV
Musgrave Secures Advanced Gold and Copper Project
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Musgrave has entered into a conditional Farm-In and Joint Venture Agreement with Silver Lake Resources Limited on the Cue Project that includes the Moyagee and Hollandaire Mineral Resources and Reserves in the Murchison goldfields of Western Australia:
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1.9Mt @ 2.0g/t Au (126,900oz contained Au) in Resources at Moyagee*,
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0.7Mt @ 1.6g/t Au (34,300oz contained Au) in Resources at Hollandaire and Rapier*,
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2.0Mt @ 1.9% Cu (38,800t contained Cu) in Resources at Hollandaire*, and
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0.4Mt @ 3.3% Cu (14,700t contained Cu) in Reserves at Hollandaire*.
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The Project delivers on the Company's previously announced strategy to acquire an advanced stage project within Australia.
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Significant upside potential and high priority drill ready targets identified.
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Extensional drilling and new target testing to commence immediately following satisfaction of Conditions Precedent.
*Note: Gold and Copper resources are estimated by Silver Lake Resource Limited (SLR) and reported in SLR ASX Announcement 'Mineral Resources and Reserves Update', 28 August 2015.
28 Richardson Street, West Perth WA 6005 Telephone: (61 8) 9324 1061 Fax: (61 8) 9324 1014
Musgrave Minerals Ltd ('Musgrave' or 'the Company') (ASX: MGV) is pleased to announce that it has entered into a Farm-In and Joint Venture Agreement with Silver Lake Resources Limited (Silver Lake') (ASX: SLR) to earn up to an 80% interest in the Cue Project (previously part of SLR's Murchison Operation) consisting of the Moyagee Gold and Hollandaire Copper Projects ('Project') in the highly prospective Murchison province of Western Australia (Figure 1).
Commenting on the transaction, Musgrave Managing Director Rob Waugh said, 'This opportunity provides an advanced gold and copper project for Musgrave and we will immediately look to advance targets through discovery and extensional drilling to define sufficient resources to underpin a profitable near-term development scenario. The Project is in a well-endowed gold district and an emerging, under-explored base metal province with significant upside in both gold and copper with the potential for multiple discoveries.'
'Silver Lake is an existing shareholder of the Company and Musgrave looks forward to strengthening this relationship and working together on the Project.'
The Farm-In and Joint Venture Agreement is subject to a number of Conditions Precedent to be satisfied by 8 January 2016. The Conditions Precedent and a summary of commercial terms are provided on page 4 of this announcement.
Overview of Cue Project
Hollandaire Copper Project Area
The Hollandaire Copper Project was discovered by Silver Lake in 2011 and hosts a JORC (2004) compliant Mineral Resource of 2.0Mt @ 1.9% Cu for 38,800t of contained copper, 2.7Mt @ 5.8g/t Ag for approximately 495,000oz contained silver and 0.52Mt @ 1.35g/t Au for 22,500oz contained gold (refer Table 1 and see SLR ASX announcement 28 August 2015: 'Mineral Resources-Ore Reserves - August 2015').
The Hollandaire and Hollandaire West deposits are near surface (~50m) tabular stratabound volcanic-hosted massive sulphide deposits (VMS). The mineralisation is likely to be amenable to open-pit mining methods. The deposit is predominantly massive sulphide mineralisation averaging 10 metres in thickness and plunging to the south- west. Drilling to date indicates the mineralisation is open to the south- west and at depth (Figure 2).
Historical drill intersections at Hollandaire include (refer SLR ASX announcement dated 10 November 2011: High Grade Copper Discovery at Hollandaire):
Figure 1: Cue Project Location Plan comprising Hollandaire and Moyagee Projects
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9.3m @ 15.4% Cu, 2.0g/t Au & 29.0g/t Ag from 61 metres (drill hole 11HOD009)
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14.3m @ 7.8% Cu, 1.0g/t Au & 20.1g/t Ag from 109 metres (drill hole 11HOD0039)
Figure 2: 3D schematic of the Hollandaire and Hollandaire West mineralisation and down plunge targets. Red drill traces represent drill holes with down hole transient electromagnetic survey data (DHEM). Surface moving loop transient electromagnetic (MLTEM) models are also shown on the image.
Immediately on Commencement, Musgrave will undertake an RC drilling program to test the down plunge extension of the Hollandaire and Hollandaire West resource with additional drilling planned to test other high ranked copper-gold targets with the focus on increasing the Projects copper-gold resources.
Moyagee Gold Project Area
The Moyagee Project hosts a combined JORC (2012) and JORC (2004) compliant Mineral Resource of 1.93Mt @ 2.0g/t Au for 126,900oz contained gold within four separate deposits; Lena, Leviticus, Numbers and Break of Day (refer Table 1 and SLR ASX announcement 28 August 2015: 'Mineral Resources-Ore Reserves - August 2015').
Significant gold targets remain untested including Laterite Hill, Vostock, Alans Patch and Numbers South.
Historical intersections at Laterite Hill include:
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3m @ 37.6 g/t Au (drill hole EHC1),
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3m @ 19.7 g/t Au (drill hole ARC296) and
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7m @ 5.5 g/t Au (drill hole ARC282).
The Vostock target (Figure 3) sits at the intersection of a significant structure and flexure in the host stratigraphy. Vostock is a 700m long gold soil anomaly at greater than 10ppb Au and has had no effective drilling.
Alans Patch and Numbers South are gold in soil anomalies at greater than 10ppb Au located at significant flexures in the mineralised stratigraphy with no effective basement drilling.
Drilling will be undertaken to test the possible strike and plunge extensions to the resource at Lena in addition to these targets.
Next Steps
Immediately on Commencement, Musgrave intends to undertake a significant drilling program to focus on extensional drilling and new target testing to define additional gold and copper resources.
Musgrave's objective is to increase gold and copper resources through discovery and extensional drilling to underpin studies that will demonstrate a viable path to development in the near term.
Summary of Commercial Terms
The key commercial terms for the Farm-In and Joint Venture Agreement are outlined below:
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Commencement occurs on the satisfaction of the Conditions Precedent which are to be met before 8 January 2016.
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$75,000 payable in ordinary shares in Musgrave Minerals Limited on Commencement at an issue price based on Musgrave's 5-day VWAP. These shares will be held in voluntary escrow for 12 months.
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$900,000 minimum commitment on exploration expenditure on the Project within 12 months of Commencement.
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Musgrave to earn an initial 60% interest with a further spend of $1,800,000 within a further 2 years (i.e. total spend of $2.7 million to earn 60%).
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Upon completion of one of the Project Milestones referred to below, Musgrave will, at its election, either pay Silver Lake $250,000 cash or, subject to obtaining shareholder approval, issue to Silver Lake that number of fully paid ordinary Musgrave shares with a total issue value of $250,000 at an issue price based on Musgrave's 5-day VWAP:
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Delineation of an additional JORC (2012) compliant inferred mineral resource of 400,000 ounces gold; or
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An additional JORC (2012) compliant inferred mineral resource of 80,000 tonnes copper.
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Once Musgrave has earned 60%, Musgrave may elect to increase its equity in the Project to 80% by spending a further $1.8M within a further 2 years.
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Once a joint venture is formed, the joint venture interest of a party which does not elect to contribute pro-rata will dilute. If a party's joint venture interest falls below 10%, it will be deemed to have withdrawn from the joint venture and its joint venture interest will convert to a 1.5% net smelter royalty.
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Upon a Decision to Mine Musgrave will, at its election, either pay Silver Lake $250,000 cash or, subject to obtaining shareholder approval, issue to Silver Lake that number of fully paid ordinary Musgrave shares with a total issue value of $250,000 at an issue price based on Musgrave's 5-day VWAP.
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Musgrave Minerals will manage the project.
The Agreement is conditional upon:
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A pre-emptive right held by Franco-Nevada Australia Pty Ltd not being exercised with respect to selected tenements within the transaction;
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Obtaining Ministerial consent under the Mining Act for the transfer of the Tenements from the Holder to Musgrave as contemplated by this Agreement.