RTG Mining Inc. (ASX: RTG, TSX: RTG, OTCQB: RTGGF) announced that it has entered into a Sale and Purchase Agreement with White Cliff Minerals Limited to acquire 90% stake in the Chanach Gold and Copper Project in the Kyrgyz Republic.
The company reported an acquisition cost of US$3.65 / ounce of Gold and US$0.0063 / pound of Copper for the Chanach project.
RTG said that the purchase price consists of consideration of US$2.15 million cash and US$0.5m in RTG shares, which would be escrowed for 12 months.
The company said that the transaction would be subject to WCN shareholder approval with a target completion date of mid to late October 2019.
The agreement requires a unanimous WCN board recommendation and shareholder support statements from 20% of WCN’s shareholders to vote in favour of the Transaction.
Experienced technical expert, advising RTG, expressed confidence that the exploration potential at the Chanach Project is excellent.
The Chanach project is located in the prolific southern Tien Shan metallogenic belt, which runs more than 1,500 km from Uzbekistan through to China and hosts one of the world’s largest open pit gold mines, Murantau.
The project area, located in the Kyrgyz Republic (License AP590), is considered to be highly prospective for world class epithermal gold, porphyry copper-gold and polymetallic skarn deposits with numerous targets already identified.
The project has only 5% of the identified strike length tested to date, indicating its potential for substantial upside. Major deposits located within 100km of Chanach contain inventories of up to 93 million ounces of gold and 25 million tonnes of copper.
To date the limited exploration activities have defined an Inferred Mineral Resource of 2.95 Mt @ 5.11 g/t Au for 484,000 ounces of Au and 17.23 Mt @ 0.37% Cu for 64,000t of Cu.
The Chanach project is currently owned by mineral exploration and development company White Cliff Minerals (ASX: WCN).
High-grade results from previous exploration
WCN’s exploration drilling at the Chanach Gold Project commenced in 2014 and has reported spectacular intersections of gold mineralisation spanning across the project area.
Significant intervals from the Quartz Gold Zone include 8m @ 57.08 g/t Au from 75m including 1m @ 85.53 g/t Au from 76m, 1m @ 89.34 g/t Au from 80m followed by 1m @ 73.28 g/t Au from 81m; 7m @ 23.52 g/t Au from 45m including 1m @ 149.41 g/t Au from 45m; and 12m @ 15.65 g/t Au including 1m @ 63.24 g/t Au from 82m followed by 1m @ 95.12 g/t Au from 83m.
Significant intervals from the Sandstone Gold Zone include 4m @ 99.15 g/t Au from 65m including 1m @ 348.48 g/t Au from 67m; and 3m @ 41.45 g/t Au including 1m @ 71.58 g/t Au from 53m.
Significant intervals from the Lower & Upper Gold Zone include 6m @ 38.40 g/t Au from 26m with 4m @ 56.46 g/t Au from 26m including 1m @ 49.79 g/t Au from 26m, 1m @ 23.55 g/t Au from 27m, 1m @ 95.22 g/t Au from 28m and 1m @ 57.29 g/t Au from 29m; and 4m @ 23.83 g/t Au from 85m including 1m @ 30.19 g/t Au from 86m.
SPA with White Cliff Minerals Limited
RTG has now entered into a Sale and Purchase Agreement (SPA) to acquire a 90% interest in the Chanach Project through the acquisition of 100% of PB Partners (Malaysia) Pte Ltd, a wholly owned subsidiary of WCN.
Terms of SPA
The company reported that the Transaction is subject to the approval of WCN shareholders under Chapter 11.2 of the ASX Listing Rules.
RTG reported that the purchase price consists of cash consideration of US$2.15 million and US$0.5 million in new RTG shares to be issued at a price equal to the 5-day VWAP of the RTG shares on the ASX for the 5 trading days leading up to the completion of the Transaction.
The company reported that the purchase price, together with the planned initial drill program have been fully funded by a new unsecured loan of US$2.5 million, obtained by RTG from an external financier, on arm’s length terms and conditions.
This represents a highly attractive and value accretive deal for RTG with an acquisition cost of only US$3.65 per gold ounce and US$0.0063 per pound copper.
The agreement states that on completion, RTG will be manager and operator of the Chanach Project Joint Venture company and will solely fund operating expenditures.
This will be done until completion of a Bankable Feasibility Study, after which funding will then be contributed on a pro-rata basis in accordance with Chanach Project interests.
The remaining 10% joint venture partner is two local brothers, both geologists, who have a strong understanding of the region, orebodies and new targets for extension, with good local support and strong relationships with the mining authorities. They have waived their pre-emptive rights.
The company reported that in addition to WCN shareholder approval, the Transaction and the transactions contemplated in the SPA are subject to any applicable regulatory approvals and no material adverse change/breach of warranties.
Planned exploration in 2019
RTG said that Chanach Project is a target-rich environment with 2019 planned exploration focussing on multiple gold targets designed to extend the current Inferred Mineral Resource.
The company said that the total exploration drilling includes 142 reverse circulation and diamond holes totalling approximately 19,500 metres, of which 111 drill holes for a total length of 14.1km can be attributed to the Chanach Gold Project and the balance to copper exploration and the development of the Chanach Copper Project.
Comments from technical consultant
RTG Consultant and Chartered Professional Geologist, Greg Hall of Phoenix Gold International and former Chief Geologist for Placer Dome visited the Chanach Project area.
He said: “The extensive red hematite staining in the project area is an indication of the size of the system, which along with other geological factors and anomalies would indicate an exploration target materially greater than the current Inferred Gold Mineral Resource with further upside in several porphyry and skarn targets that remain untested”