Dark Horse Resources to acquire multi-mineral Cachi project

Dark Horse Resources (ASX: DHR) has grabbed an exploration and option agreement from vendor Tres Cerros Exploraciones to snap up at least 95% of the 17,300ha Cachi mineral project in Argentina through US$2.55 million (A$3.37 million) in staged payments.

The Cachi project is located in the Santa Cruz province, which is also home to the multi‐million‐ounce Goldcorp (TSE: G) Cerro Negro and AngloGold Ashanti (ASX: AGG) Cerro Vanguadia gold deposits. The province also houses Dark Horse’s Los Domos gold project, which it picked up as another farm-in project in late 2016.

Dark Horse, which had a A$37.56 million market capitalisation earlier today, said its latest farm-in project contained two “significant” primary mineral target areas, Morena and Vetas Cachi.

A Morena rock assay reportedly graded 11.7 grams per tonne gold and 96g/t silver while a drill hole assay from the prospect included 2.4m of zinc grading 17%, 1m grading 7.6% lead, 0.5m grading 3.7 g/t gold and 1m grading 164g/t silver.

Meanwhile, a Cachi prospect rock assay graded 41.3g/t gold.

The Cachi project also features at least four other targets flagged by De Grey Mining (ASX: DEG) in 2012 and 2013: Vetas NW, Cachi Central, Los Bloques and Cachi Norte.

Dark Horse director Neil Stuart called the project acquisition “fortunate”.

“We are again very fortunate, having already secured the Los Domos gold project and the PROAR mineral portfolio of properties, to have been able to secure the Cachi mineral project,” the non-executive director said.

“I’ve always been optimistic in the potential for the discovery of medium to large-scale gold‐silver projects in this region of Argentina, as a result of my earlier involvement in the Cerro Negro gold project, which is a multi‐million‐ounce gold deposit and now an operating gold mine.”

The company had been actively on the hunt for new projects after bolstering its presence in Argentina’s San Luis province in March 2018 and snapping up the PROAR gold tenements in November 2017.

Bucks for buy-in

To earn its stake, Dark Horse must pay a US$10,000 signing fee, serve up another US$15,000 to execute the contract within 60 days, deliver US$25,000 six months after the start date then another US$50,000 at the one-year mark, US$75,000 at two years, and a further US$175,000 at three years.

Only then will it earn its first stake of 35%.

After that point, Dark Horse will earn a majority 51% share by paying US$275,000 four years on from the start date.

The Argentina-focused explorer can then take its stake to 61% by paying an additional US$375,000 at the five-year mark, upping its share to 75% at six years with US$550,000 before serving up US$1 million to take its holding to 95%.

If the vendor does not wish to fund its 5% share of a mine development, it can dilute its holding to a 2% net profit interest.

Money in the bank

Dark Horse completed a A$4.05 million placement to qualified institutional and sophisticated investors at A$0.02 a share on 4 June 2018, as it concurrently opened a A$1 million capital raising from shareholders registered on 29 May.

The company held A$951,000 in cash at the end of the March 2018 quarter and estimated in its quarterly report it would burn about A$500,000 in the June quarter.

Dark Horse securities were up 5% to A$0.021 by mid-afternoon.