Alto Metals identifies new gold zone at Sandstone, advises shareholders to reject Habrok takeover bid

Gold explorer Alto Metals (ASX: AME) has confirmed the discovery of a thick zone of shallow gold mineralisation south of the Lord Nelson open pit at the Sandstone gold project, 600 kilometres north of Perth.

The company discovered the 36m-thick section during an initial 1,500m drilling program, where the first two of seven holes yielded 20m at 2.3 grams per tonne gold from 64m, within a broader zone of 36m at 1.6g/t from 48m; and 4m at 4.1 g/t gold from 112m.

Drilling targeted mineralisation to 50m vertical depth and confirmed a new repeat lode 200m to the south of the Lord Nelson pit.

Assays are pending for the remaining five holes which targeted a zone of primary mineralisation discovered beneath the pit.

High-grade mineralisation

The current drilling program follows results in April, which demonstrated the continuity of thick zones of high-grade gold mineralisation at depth.

Best results from that announcement were 17m at 3.5g/t gold from 200m, including 4m at 11.6g/t gold from 211m, and 1m at 25.5g/t gold from 214m; and 16m at 5.2g/t gold from 240m, including 3m at 13.5g/t gold from 240m.

Managing director Matthew Bowles said the new lode highlights the presence of a large-scale mineralised gold system at Sandstone.

“The mineralisation style of this lode is the same as that of the Lord Nelson deposit and highlights the potential for a series of repeat lodes along the structural corridor which have never been systematically tested,” he said.

“We see so much potential at Lord Nelson with high-grade gold intersections in oxide, transitional and primary zones now extending the gold mineralisation footprint to over 870m.”

Historic mining

The Lord Nelson deposit was previously mined by Troy Resources (ASX: TRY) to 90m depth and produced 207,000 ounces gold grading 4.6g/t.

Alto said its drilling results show the mineralisation style and geological setting of the deposit – together with the newly-discovered mineralisation below the open pit – are analogous to other Yilgarn orogenic gold deposits which extend to great depth.

The company believes the potential of the area has not yet been realised and the prospect remains a priority area for future drilling programs.

These programs will include further infill and extension drilling along strike and at depth at Lord Nelson; testing of additional repeat lode targets at the nearby Lords’ Camp area; and follow-up drilling at the Bulchina South, Vanguard Camp and Indomitable Camp prospects, as well as other regional targets within the Sandstone project.

Sandstone is spread over 800 square kilometres and comprises the vast majority of the highly-prospective and under-explored Sandstone Greenstone Belt.

The project has a JORC resource of 290,000oz grading 1.7 g/t gold.

Habrok takeover bid

Alto’s board has advised shareholders to take no action in response to a revised off-market takeover bid received by privately-owned investment company Habrok Mining.

The bid was first presented to Alto in May and offered to buy all the company’s shares at $0.066 on an unconditional basis, meaning the transaction would not be subject to due diligence, financing, regulatory or further internal approvals.

It was in competition to an unsolicited takeover attempt in February by Goldsea Australia Mining (a subsidiary of Shandong Goldsea Group Co Ltd), which priced its bid for Alto at $0.065 per share.

In its letter of intent at the time, Habrok assumed the Alto board would withdraw its recommendation of the Goldsea offer.

Goldsea’s takeover offer lapsed on 8 July.

Price increase

Last week, Habrok increased its offer price for Alto to $0.07 per share, subject to Alto terminating a 1-for-4 accelerated pro-rata non-renounceable entitlement offer launched this month to raise $5.1 million.

The entitlement offer was priced at $0.07 per new share, representing a 6.06% premium to the share price offered under Habrok’s original takeover bid.

The offer had received early support from the majority of Alto’s key shareholders, who had simultaneously confirmed their intention to reject Habrok’s bid.

Proceeds of the entitlement offer would be used to continue exploration at Sandstone and fund expenses associated with Habrok’s proposal.

Three days after Habrok’s revised offer, Alto’s board confirmed it would not terminate the company’s entitlement offer as it remained “in the best interests of shareholders as a whole”.

WA-based Habrok has interests in iron ore and gold projects, with assets in pre-feasibility, production and care and maintenance stages.

At mid-afternoon, shares in Alto were trading 19.72% higher at $0.085.