Mr. Stabro Kasaneva reports
AUSTRAL GOLD SIGNS LOI TO EXPAND CHILEAN ASSET BASE
Austral Gold Ltd. and Pampa Metals Corp. have entered into a non-binding letter of intent whereby Austral may acquire up to an 80-per-cent interest in the Cerro Blanco and Morros Blancos properties held by Pampa.
Austral Gold's chief executive officer Stabro Kasaneva said: "Following our recent acquisition of Revelo Resources Corp., which included exploration projects located close to our Guanaco/Amancaya mining complex and a 19.9-per-cent shareholding interest in Pampa, we are pleased to enter into this LOI, which should enable us to further increase the number of projects that we own or control in the area. Our interest in this transaction is consistent with our strategy to obtain a leading role in the Paleocene-Eocene belt in Chile which we believe is a prolific mineralized belt that is underexplored for precious metals."
Highlights of the LOI
Pampa has agreed to grant Austral an option to acquire an initial 60-per-cent interest in the Cerro Blanco and Morros Blancos for the following consideration:
- $3-million (U.S.) in exploration expenditures on the properties including a minimum of $1-million (U.S.) in year one and a further $2-million (U.S.) in year 2;
- 2,963,132 shares of Pampa that Austral holds through Revelo. After returning these shares, Austral's shareholding in Pampa will be reduced to approximately 13.6 per cent;
- Austral will terminate its nomination right to appoint a representative to the board of directors of Pampa through Revelo.
If Austral exercises the option and earns a 60-per-cent interest in a property or the properties, Austral may increase its interest in each such property to an aggregate total of 65 per cent (stage one) for the following consideration:
- Minimum drilling of 15,000 metres;
- Studies required to complete a preliminary economic assessment;
- PEA by an internationally recognized engineering firm to the standards, and in the form, prescribed under National Instrument 43-101;
- Minimum annual exploration expenditures on each property of $250,000 (U.S.).
Austral may at its sole discretion, elect to earn an additional 15-per-cent interest in a property or the properties (stage two) by completing the following activities within five years from providing notice to Pampa that it intends to reach stage two:
- Minimum drilling of 10,000 metres;
- Studies required to complete a bankable feasibility study;
- BFS by an internationally recognized engineering firm to the standards, and in the form, prescribed under NI 43-101.
If Austral does not complete these activities, then Pampa will be named operator of a property or the properties and may increase its ownership from 35 per cent to 80 per cent by completing these activities, on the same conditions established for Austral.
The primary exploration targets of Austral on the properties are gold, silver and other precious metals. If Austral's exploration on the properties results in a reasonable conclusion that copper is the dominant metal for a property, Pampa will become the 60-per-cent holder of the property, and will have the same earn-in rights and parameters as described for Austral with appropriate adjustments.
The transaction is subject to due diligence, compliance with any requirements from the ASX and TSX Venture Exchange, execution of a definitive agreement and certain undertakings from Pampa, in addition to customary conditions precedent to be included in the definitive agreement. Austral expects the transaction to close before the end of June, 2021.
About the properties
Both the Cerro Blanco (6,500 hectares) and the Morros Blancos (7,300 hectares) properties are prospective for porphyry copper (plus/minus gold, plus/minus molybdenum) and high-sulphidation epithermal gold-silver (plus/minus copper) deposits which are located in the heart of the Paleocene mineral belt in northern Chile. The Paleocene belt is host to important copper and gold-silver deposits and mines, and the properties are located along a prolific segment of the prospective belt, along trend from important copper mines such as Spence (BHP) and Sierra Gorda (KGHM and Sumitomo), as well as precious metals mines and projects.
Cerro Blanco is located about 20 kilometres southwest of the multimillion-ounce El Penon gold-silver mining district (Yamana Gold) and Morros Blancos is located adjacent and to the east of Austral's Amancaya gold-silver mine. Access to both projects is easy, both being located less than 30 kilometres from the Pan American Highway, and altitudes are moderate. Both projects are close to Austral's Guanaco processing plant, which may allow for more efficient and cost-effective development and operation.
About Austral Gold Ltd.
Austral Gold is a growing gold and silver mining, development and exploration company building a portfolio of quality assets in Chile, the United States and Argentina. Austral owns a 100-per-cent interest in the Guanaco/Amancaya mine in Chile and the Casposo mine (currently on care and maintenance) in Argentina, and a non-controlling interest in the Rawhide mine in Nevada, United States. In addition, Austral owns an attractive portfolio of exploration projects in the Paleocene belt in Chile (including those acquired in the recent acquisition of Revelo Resources Corp.), a 19.2-per-cent interest in Pampa Metals and a 100-per-cent interest in the Pinguino project in Santa Cruz, Argentina. Austral Gold is listed on the TSX Venture Exchange (AGLD) and the Australian Securities Exchange (AGD).
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