Red 5 Limited (ASX: RED) has entered into an Option Agreement with Terrain Minerals Ltd for the right to purchase a 100% interest in Mining Lease M37/54, containing the Great Western gold deposit.
The Option Agreement, signed with Red 5’s wholly-owned subsidiary, Darlot Mining Company, provides for an exclusive option period of five months.
It also entitles Red 5 to conduct due diligence and drilling activities within the Great Western Mining Lease M37/54 to determine the suitability of the Great Western deposit to be mined and trucked to the company’s Darlot processing plant, located approximately 80km by road to the north.
Should the option be exercised the consideration for the purchase is the issue of $2.2 million worth of ordinary fully paid shares in Red 5.
The assets include the Great Western deposit, which is located wholly within mining lease M37/54 and has a reported estimated JORC 2012 compliant mineral resource totalling 709,000 tonnes at an average grade of 2.72g/t Au for 62,000 ounces of contained gold.
Red 5 Managing Director, Mark Williams, said the proposed acquisition provided a low-risk opportunity for the company to increase its Mineral Resource base within economic trucking distance of the Darlot gold processing plant.
“This represents a strong opportunity for Red 5. Mining Lease M37/54 has an existing Mineral Resource, and is located in close proximity to our existing Darlot operations. This option agreement with Terrain Minerals provides the opportunity to complete additional drilling and confirm this potential with minimal upfront cash outlay.
Darlot is one of the great gold mines of the Eastern Goldfields, operating continuously for over 30 years and producing approximately 2.9 million ounces of gold to date. It is a core asset for Red 5 and we have a multi-pronged plan underway to deliver continued growth in Resources and mine life,” he said.