Manhattan Corporation (ASX: MHC) is acquiring a 100% interest in the high-grade Tibooburra gold project in New South Wales through the takeover of Perth-based gold explorer Awati Resources.
The mineral explorer today announced the initiation of its high-grade gold strategy by inking a heads of agreement to acquire Awati as a wholly-owned subsidiary.
According to Manhattan, the Tibooburra project is located in an emerging district that holds considerable potential to host multi-million-ounce orogenic gold deposits similar to those found in Victoria at Kirkland Gold’s (ASX: KLA) booming Fosterville mine.
In today’s announcement, Manhattan said it plans to start drilling at the project’s new Bendigo prospect to follow a north-plunging, high-grade shoot in early 2020.
The company has also identified seven additional priority targets for drill testing next year.
Located about 200km north of Broken Hill in north-western NSW, the Tibooburra project comprises 10 exploration licences covering 1,020sq km.
The project stretches 160km south from the historic Tibooburra goldfields along the New Bendigo fault and toward the recently discovered Kayrunnera gold nugget field.
The northern licences of the project include the New Bendigo prospect, where on-ground exploration has returned encouraging gold intersections including 26m at 4.55 grams per tonne of gold from 8m, 8m at 7.1g/t gold from 12m, and 4m at 11.33g/t gold from 36m.
These intercepts and more will be followed up by Manhattan’s planned early 2020 drilling program.
The program will also include at least two other priority targets at New Bendigo, initially with fences of rotary air blast holes to define zones of gold anomalism ahead of deeper reverse circulation drilling, the company said.
Four priority targets have also been identified in the southern licences of the Tibooburra project – Cobham Ridge, Fault Splay, North Gap and Mongrel.
No previous drilling has ever been conducted within these southern tenements. Manhattan said it planned to drill test at least three of these southern targets in 2020.
Awati Resources is a gold exploration company with offices in Perth, Western Australia although its entire tenement package is in NSW. The company had ambitions to list on the ASX in mid-2018 but ended up cancelling its IPO.
Under the signed heads of agreement, Manhattan acquire 100% of Awati shares by issuing 200 million fully paid Manhattan shares to Awati shareholders at a deemed issue price of $0.005 each.
In addition, Awati shareholders will be issued a total of 50 million options to acquire fully paid shares in Manhattan, with each option having an exercise price of $0.01 and an expiry date of 1 April 2023.
Consideration for the acquisition also includes 300 million performance shares that can be converted into Manhattan shares on the announcement of a JORC-compliant resource of at least 500,000 ounces of gold at the Tibooburra project at a cut-off grade of 0.5 grams per tonne.
Completion of the acquisition is conditional upon the satisfaction of conditions precedent by the later of three months after 29 November 2019 and 31 March 2020.
These conditions precedent include Manhattan completing and being satisfied by its due diligence review of Awati and Tibooburra; both parties obtaining all necessary shareholder approvals; and Manhattan raising a total of $500,000 by undertaking a placement to sophisticated and professional investors of 100 million shares at $0.005 per share.
Manhattan is anticipating completion of the acquisition on 22 January 2020.
The acquisition of Awati is also expected to bring Awati non-executive director Jens Balkau to the board of Manhattan and Awati executive director Noel Archer is being proposed as Manhattan’s new technical advisor.