REG - Power Metal - Acquisition of Historic Berringa Gold Mine

Power Metal ResourcesAnnouncement

06/07/2022 14:00

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RNS Number : 5532R  Power Metal Resources PLC  06 July 2022

6 July 2022

Power Metal Resources PLC

("Power Metal" or the "Company")

Acquisition of Historic Berringa Gold Mine - Victoria, Australia

 

Power Metal Resources plc (LON:POW), the London listed exploration company
seeking large-scale metal discoveries across its global project portfolio
announces an update in relation to its joint venture ("JV") subsidiary New
Ballarat Gold Corporation Plc ("NBGC"), which is focused on the prolific
Victorian Goldfields of Australia. The JV is held between Power Metal (49.9%)
and its partner, London-listed Red Rock Resources plc (50.1%).

Red Rock Australasia Pty Ltd ("RRAL"), the 100% owned Australian operating
subsidiary of NBGC, has entered an agreement ("Agreement") to acquire the
exploration licence EL5535 covering the historic Berringa Mine ("Berringa" or
the "Project") from Balmaine Gold Pty Ltd ("Vendor").

A map highlighting the location of the Project may be seen on the Company's
website through the following link:

https://www.powermetalresources.com/berringa-map-2/
(https://www.powermetalresources.com/berringa-map-2/)

HIGHLIGHTS:

·    RRAL has signed an agreement to acquire EL5535, a 288-hectare
exploration licence located approximately 25km southwest of Ballarat,
Australia. EL5535 covers the Berringa Gold Mine which has historical
production of 293,250 ounces of gold from 1898-1952, at an average grade of
8.3g/t.(1)

 

·    A 30 tonne bulk sample extracted in the mid-1970s from a 116m deep
central shaft returned an impressive grade of 9.8g/t.(1)

 

·    Drill targets identified from an analysis of previous exploration
will enable RRAL to move rapidly to drilling.(1,2)

 

·    2004 and 2014 technical reports calculated possible exploration
target ranges down to 1000m of 0.91 to 3.89million(*,**) and 0.70 to
2.91million(*,**) ounces of gold respectively at Berringa.(1,2) Further
details in respect of these exploration targets are provided below.

 

·    NBGC is in discussions with the Vendor, regarding the possibility of
processing ore at their nearby Ballarat Gold Mine should NBGC discover and
develop an economic deposit - located approximately 25km away. This would
dramatically reduce both mine build-out time horizons and heavy capital
requirements for building a new standalone processing facility.

Paul Johnson, Chief Executive Officer of Power Metal Resources PLC commented:

"This acquisition brings into our Victoria Goldfields JV a second former
high-grade gold mine, where there exists significant underexplored exploration
potential below historical workings where minimal drilling has been completed
to date.

The historic Berringa Gold Mine adds to 1,832km(2) of already granted licence
footprint in the Victoria Goldfields, and complements another former
high-grade gold mine within the JV footprint, Ajax, which has recorded
historical production of 312,789 ounces of gold at an average grade of
14.8g/t.(3)

Further information will follow in the near term from the JV and next stage
developments."

FURTHER INFORMATION

Exploration Licence 5535 is held by Balmaine Gold Pty Ltd, which is a wholly
owned subsidiary of Golden Point Group Pty Ltd ("GPG"), itself the subsidiary
of Shen Yao Holdings Ltd, a company listed on the Singapore Exchange (the
companies collectively being the "Vendor Group").

GPG are the owners of the nearby Ballarat Gold Mine, which has annual
production guidance of 40,000 to 50,000 ounces of gold per year.(4)

The Vendor Group's licence has its origins in the acquisition of the tenement
area in 1998 with the view of the tenement supplying additional gold to the
nearby Ballarat Mine. After passing through Lihir Gold, the tenement came into
the hands of the Vendor Group. The mining licence was surrendered in 2014,
with an exploration licence covering the same area then being granted to the
Vendor. For various reasons, the work on the tenement has not been as
extensive as planned.

A 2004 Berringa Exploration Strategy Technical report was produced by Hamish
Forgan & Steven Olsen on behalf of a previous owner of the Licence,
Ballarat Goldfields NL ("Ballarat Goldfields"). Mr Olsen was an employee of
Ballarat Goldfields and a compent person as defined by the JORC code. The 2004
report highlighted a proposed exploration target ranging from 913,488 to
3,889,718 ounces of gold down to a depth of 1000m at Berringa.(2)

Subsequently, on the surrender of the previous mining licence, a further
technical report was prepared which summarised the findings from work
undertaken from 1992 to October 2014. The 2015 report was produced by Jason
Fothergill on behalf of the operators at the time Caslemaine Goldfields Pty
Ltd.  Within the 2015 report, an updated proposed exploration target was
calculated which ranged from 697,112 to 2,907,790 ounces of gold down to a
depth of 1000m.(1) The results from this report are summarized in the below
table.(*,**)

 Depth Extent  Theoretical tonnage  Assumed Grade     Target Size    Risk Weighted Exploration Target
 0 - 300m      475 - 2,974k t       5.8 - 14.2g/t Au  554k oz. Au    217k oz. Au
 300 - 600m    494 - 5,793k t       5.8 - 14.2g/t Au  1.080 Moz. Au  225k oz. Au
 600 - 1,000m  558 - 6,827k t       5.8 - 14.2g/t Au  1.273 Moz. Au  255k oz. Au
 TOTAL         1.5 to 15.6 Mt       5.8 -14.2g/t Au   2.907 Moz. Au  0.697 Moz. Au

*The exploration targets tabled above are not to be considered as an estimate
of a Mineral Resource or Ore Reserve as those terms are defined in the JORC
(2012) Code. The potential quantity and grade is conceptual in nature, that
there has been insufficient exploration to estimate a Mineral Resource It is
uncertain if further exploration will result in the subsequent estimation of
any Mineral Resource. A drilling programme planned to test the valididy of the
exploration target outlined above is currently being planned, and details will
be included in the licence renewal application which will be submitted prior
to the expiration date of 16 November 2022. Further updates regarding the
proposed drilling programme will be supplied to the market in due course.

**The top end of the exploration target ranges produced represents the total
ounce potential that would exist if each target area (0-300m, 300-600m,
600-1000m) had the same gold endowment as the historically mined orebodies at
Berringa. Several risk factors were applied to the above calculation, which
take into account the unknown location of various faults, folds and
diltational jogs down to 1000m. The low end of the exploration target range
reflects the full application of all calculated risk factors to the top end
estimate.

Transaction Terms

For the purchase of 100% of the Vendor's interest in the Licence to RRAL,
covering the historical Berringa Gold Mine, the following consideration is
payable:

·    The issue to the Vendor staged cash payments totalling AUD$500,000 as
outlined below:

o  Initial payment of AUD$20,000 payable on successful transfer of the
exploration licence to RRAL.

o  On successful renewal of the Licence for an additional term of 5 years,
which currently expires on 16 November 2022, an additional payment of
AUD$130,000, which can be satisfied through the issue of either cash and/or
publically traded shares.

o  On public release of a initial JORC Compliant resource estimate of greater
than 100,000 cumulative ounces of gold in the Inferred category, a further
payment of AUD$350,000, which can be satisfied through the issue of either
cash and/or publically traded shares.

·    Upon the successful commencement of commerical production, a 1.5% Net
Smelter Return ("NSR") royalty will be issued to the Vendor over the Licence,
with total payments capped at AUD$1,500,000 over the life of the NSR royalty.

·    RRAL inherits the responsibility for a pre-existing 2.5% NSR Royalty,
with total payments capped at AUD$50m, payable to Altus Strategies Plc.  This
royalty is part of a wider royalty covering actual or potential gold
production from a number of licences including that from the Ballarat gold
mine.  Of the AUD$50m, to date AUD$14.5m has been received by the royalty
holder and therefore AUD$35.5m of the capped amount remains.(5)

New Ballarat Gold Corporation

NBGC through its wholly owned local operating subsidiary RRAL holds a strong
land position comprising 14 granted exploration licences for a total area of
1,832 km(2) within the gold fields of Victoria, Australia, principally around
the mining centre of Ballarat.

5 licences covering 493km(2) await grant. The company has carefully assembled
its portfolio of properties comprising a broad range from robust exploration
targets to near term resource potential, all of which remain largely
undeveloped by modern explorers.

With the first tenements granted only in 2021, RRAL has already conducted
detailed exploration of its initial targets, including a diamond drill test of
two prospects starting in December 2021.

520m of diamond drilling has been carried out at O'Loughlin's and 340m has
been carried out at Mt Bute, with samples sent to MinAnalytical Laboratory
Services in Perth, WA, for laboratory assay testing.

References

(1)Final Technical Report Berringa Gold Project MIN 4191 Oct 2014. J
Fothergill Balmaine Gold Pty Ltd

(2)Berringa Exploration Strategy Technical Report: Sept 2004, H Forgan

(3)Sharp, D. & Sheerin K: OreTech Mining Solutions - Tenement Review and
Exploration Strategy - EL007330 Daylesford. Unpublished independent geologist
report prepared for Red Rock Australasia Pty Ltd. (2020).

 

(4)https://ballaratgoldmine.com.au/our-mine/

(5) Royalty Overview Dashboard - Altus Strategies
(https://altus-strategies.com/projects/royalty-dashboard/caserones-2/
(https://altus-strategies.com/projects/royalty-dashboard/caserones-2/) )

 

COMPETENT PERSON STATEMENT

The technical information in this report is compiled by David Holden, BSc,
MBA, MEM, who is a member of the Australian Institute of Geoscientists and a
director of NBGC, and the Exploration Director of RRAL. He is a member of a
recognised professional organisation and has sufficient relevant experience to
qualify as a qualified person as defined in the Guidance Note for Mining, Oil
and Gas Companies, published by AIM.

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic
law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

 

 

For further information please visit https://www.powermetalresources.com/
(https://www.powermetalresources.com/)  or contact:

 Power Metal Resources plc
 Paul Johnson (Chief Executive Officer)                                          +44 (0) 7766 465 617

 SP Angel Corporate Finance (Nomad and Joint Broker)
 Ewan Leggat/Charlie Bouverat                                                    +44 (0) 20 3470 0470

 SI Capital Limited (Joint Broker)
 Nick Emerson                                                                    +44 (0) 1483 413 500

 First Equity Limited (Joint Broker)
 David Cockbill/Jason Robertson                                                  +44 (0) 20 7330 1883

 

NOTES TO EDITORS

Power Metal Resources plc - Background

Power Metal Resources plc (LON:POW) is an AIM listed metals exploration
company which finances and manages global resource projects and is seeking
large scale metal discoveries.

 

The Company has a principal focus on opportunities offering district scale
potential across a global portfolio including precious, base and strategic
metal exploration in North America, Africa and Australia.

 

Project interests range from early-stage greenfield exploration to later-stage
prospects currently subject to drill programmes.

 

Power Metal will develop projects internally or through strategic joint
ventures until a project becomes ready for disposal through outright sale or
separate listing on a recognised stock exchange thereby crystallising the
value generated from our internal exploration and development work.

 

Value generated through disposals will be deployed internally to drive the
Company's growth or may be returned to shareholders through share buy backs,
dividends or in-specie distributions of assets.

 

Power Metal Exploration Programmes Underway/Results Awaited

Power Metal has exploration programmes completed or underway, with results
awaited, as outlined below:

 

 Project                Location                      Current          Work Completed or Underway                                                    Results Awaited

                                                      POW %

 Alamo Gold Project     USA                           Earn-in to 75%   Excavation of multiple test pits and mapping & sampling completed.            Field and assay results from on-site work programme.
 Athabasca Uranium      Canada                        100%             Data compilation across uranium properties completed.                         Interpretation results from all Properties complete. Next steps upcoming.
 Authier North Lithium  Canada                        Earn-in to 100%  Soil & rock sampling completed.                                               Technical Review of exploration results & define next exploration steps.
 Molopo Farms           Botswana                      53%(#)           Review of recent exploration findings.                                        Determine next exploration steps and action plan.
 Ditau Project          Botswana                      50%              Drill programme focused on key targets notably drilling of potential          Field updates and receipt & review of laboratory assay results.
                                                                       carbonatites and targeting rare-earth elements
 Kalahari Copper Belt   Botswana                      50%              Exploration programme underway across the South Ghanzi Project and further    Field programme findings and defined drill targets for near term drilling.
                                                                       exploration at the more recently acquired South Ghanzi Extension and Mamuno
                                                                       licence areas
 Victoria Goldfields    Australia                     49.9%            Diamond drill programme completed.                                            Field updates and receipt & review of laboratory assay results.

 Paterson Projects      Western Australia             82.78%(*)        Wallal passive seismic and 2D seismic processing work programme completed.    Findings from multiple work programmes including final approvals and

                                                                             preparations for planned deep diamond drilling at Wallal.
                                                                       Review of historical data and target generation for Ripon Hills &
                                                                       Braeside West projects.

 Selta Project          Northern Territory Australia  82.78%*          Lithium review underway including desktop and field mapping and sampling.     Findings from lithium review exploration programme.

(*) reducing to 62.12% after Completion of the Pre-IPO Financing

(#) subject to completion of acquisition announced 18.5.22 interest will
increase to 87.71%

 

 

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