Desert Metals (ASX:DM1) has completed its review of the Little Gap Well and Mount Opal projects and has resolved to proceed with option stage two of the acquisition.
Following the 3-month period of due diligence for stage one, the company has resolved to proceed with the transaction and has the option under stage three of the letter agreement to acquire a further 20% of the projects from privately held Diversified Asset Holdings, via staged payments of cash and shares.
Desert Metals will also have a right of first refusal to acquire the remaining 20% of the projects held by Diversified Asset Holdings.
The projects are some 50km and 30km south of Belele, respectively, within the Meekatharra gold district. As part of its due diligence, Desert Metals conducted field reconnaissance at the projects and located several historic workings as well as numerous areas of more recent gold prospecting (metal detecting). Several grab samples were taken and returned ‘encouraging results’.
As a result of proceeding, Desert Metals will acquire a 60% interest in the projects for $50,000 cash, 2.5 million shares and 1.25 million share options at $0.15. The shares and share options will be escrowed for 6 months from the date of issue.
The company now intends to follow up with an intensive program of sampling, ground geophysics and drilling. At Mount Opal work will immediately focus on identifying the orientation of mineralisation and subsequently drilling beneath the historic workings where a grab sample returned 17.3g/t Au. At Little Gap Well drill targets for gold mineralisation will be defined by results from the extensive soil sampling program conducted during the last quarter.
An electrical ground geophysical survey will be conducted surrounding the location of a grab sample that returned 3.8% copper also during the due diligence period. Drilling of any targets identified will follow.
Desert Metals reports grab samples taken from Little Gap Well during the due diligence period returned gold up to 1g/t and copper up to 3.8% from grab samples near the historic workings. This line of workings appears to have potential for Volcanogenic Massive Sulphide (VMS) mineralisation.
The company plans to conduct electrical ground geophysical surveys to locate any conductive source of the ‘high-grade’ copper and subsequently test with drilling. As part of the due diligence process an extensive soil sampling program has been completed at Little Gap Well. Once the results of the soil sampling and ground geophysics program are known the company will finalise drill targets at Little Gap Well.
Write to Adam Orlando at Mining.com.au
Images: Desert Metals Ltd