Diversified gold explorer Zenith Minerals (ASX: ZNC) has, for $210,000, acquired a 22.5% stake in a pre-IPO company that owns the Cowarra historic gold project in NSW, originally mined in the 1930s by BHP (ASX: BHP).
More recent historic drilling returned 35m at 2.3 grams per tonne gold from 23m down hole and 15m at 4.2g/t.
Unlisted Oxley Resources, which is in the pre-IPO stage, is now raising $270,000 in capital at $0.03 a share to finance the first phase of evaluation and confirmation drilling at the project, which is southeast of Canberra.
It will be a staged investment by Zenith.
An initial $140,000 will entitle Zenith to a 16.2% equity position in Oxley, with an option to invest a further “top-up” $70,000 which will lift its stake to 22.5%, with provision for vendor options with any future dilution.
Its top-up right will lapse when Oxley is listed.
Testing both open pit and underground potential
The planned reverse circulation drilling, at the Victoria deposit within Cowarra, will test for both open pit and underground mining potential.
Zenith says that, in addition, there is “significant” upside below the existing prospects and targets that were subject to shallow drilling.
BHP produced 14,000oz in the 1930s and then the former Horizon Pacific (delisted in 1991 for failing to pay its annual listing fee) had, in more recent times, carried out some small-scale open pit mining, producing 19,300oz at between 6g/t and 8g/t.
Zenith chairman Peter Bird says this deal potentially allows the company to add to its gold inventory at a very competitive “discovery cost” in a region that has been under-explored when compared to other targets across the border in Victoria within the same Lachlan Orogenic Belt.
‘Well-defined’ drill targets
“The Lachlan Orogenic Belt has not been well explored by current contemporary methods in the immediate region where the Cowarra gold project is located,” he added.
Mr Bird says there are a series of well-defined drill targets.
“We are keen to advance this project as a ‘feeder’ into our current portfolio of projects.”
This portfolio includes Split Rocks, south of Southern Cross in Western Australia, and south of the Marvel Loch 3 million ounce mine and the Yilgarn Star deposit (2Moz) and north of the 2Moz Bounty deposit.
Zenith’s other projects include the Develin Creek copper-zinc project and the Red Mountain gold project, both in Queensland.
The company also has a 25% free carried interest in the Earaheedy zinc project north of Wiluna in Western Australia, operated by Rumble Resources (ASX: RTR).
“This is an exceptional strategic portfolio which we believe will continue to add value for our business,” said Mr Bird.