Vancouver, British Columbia--(Newsfile Corp. - July 17, 2017) - Austral Gold Limited (ASX: AGD) (TSXV: AGLD) ('the Company" or "Austral") is pleased to announce that on 13 July, 2017 the Company executed a binding letter ("Offer Letter") to acquire the San Guillermo and Reprado projects (the "Projects") from Revelo Resources Corp. (TSXV: RVL) for the consideration of up to ten million Austral Gold ordinary shares representing approximately 1.9% of the total outstanding shares of Austral, subject to existing Net Smelter Royalties (each an "NSR") and an additional NSR of up to 1%. The offer is subject to due diligence, entering into a definitive agreement and customary regulatory and exchange approvals.
- Offer consists of ten million Austral Gold ordinary shares, capped at $US0.21 per share.
- If the twenty day VWAP of Austral shares is higher than $US0.21, then the number of shares actually issued will be equal to $US2.11 million dollars divided by the twenty day VWAP of Austral shares at closing.
- The San Guillermo property consists of concessions totaling 12,175 hectares that surround the Company's high grade gold and silver Amancaya project, which Austral began mining via open pit operations this year.
- The Amancaya project is approximately 3160 hectares, with the proposed transaction to significantly increase the Company's land position in this prospective emerging vein field.
- The two companies have previously signed an Option and Sale agreement ("Option Agreement"), dated February 8th, 2016 over the San Guillermo project.
- Under this agreement total payments and work commitments of $US5.1m would be due. This agreement will be terminated upon entering a definitive agreement.
- The Reprado project consists of concessions totaling 3960 hectares situated approximately 20 km to the north of the Company's Amancaya project. Historical drilling undertaken by Teck Resources Ltd. ("Teck") intersected gold in low sulphidation quartz veins trending essentially E-W.
"The acquisition of these properties advances our growth strategy of adding quality exploration targets around our existing mines," stated Stabro Kasaneva, CEO of Austral Gold. "The projects lie within the Paleocene gold belt in Chile, a prolific and generally underexplored belt. The proximity of the projects to Guanaco and Amancaya de-risks the potential to eventually mine any future discoveries on the Projects as satellite deposits. The share purchase allows us to deploy cash to exploration and development, whilst giving our shareholders accretive growth opportunities. We look forward to having Revelo as a shareholder in Austral as we look at continuing to expand the Amancaya vein camp through high value exploration."
The Offer is subject to standard no-shop and exclusivity clauses, due diligence, and regulatory and exchange approvals.
San Guillermo Property
The San Guillermo Project is comprised of 53 mining and exploration concessions totaling 12,175 hectares. The Project area lies within the Paleocene gold belt that runs north south in Chile, containing Yamana Gold Inc.'s El Peñon precious metal mine and the Company's Guanaco and Amancaya gold and silver mines. San Guillermo is located 250 km SSE of Antofagasta, reached by the paved PanAmerican national highway, then a 20km gravel road. The project's tenements encircle the Company's Amancaya project and open-pit operation, which includes offices, cafeteria and workshops. Taltal is the nearest community, which is approximately 60km to the east on the coast. The topography is largely flat, consisting of gravels and alluvial cover with isolated topographic highs up to 2200 masl. The majority of the project area is a geological extension of the Amancaya property, offering the potential to host similar type veins.
The Reprado Project consists of 25 tenements covering 3960 hectares located 20km north of the Amancaya Project. It is 5 km to the east of the PanAmerican national highway, some 210 km south of Antofagasta. The area is comprised of Paleocene granitoids, occurring within the gold Paleocene belt hosting El Peñon, Guanaco and Amancaya. These lie immediately to the east of important north-south regional faults that mark the contact of the pre-Paleocene metamorphics, lavas and intrusive coastal units to the west with the Paleocene volcanics to the east. Banded NWN-ESE trending quartz veining has been identified in subcrop. Up to 12 veins were trenched and partially drilled on a wide spacing by Teck in 2007, with trench and drilling returning encouraging precious metal mineralisation. Drilling appears to have been targeting a maximum depth of 90m on the veins.
Historical work conducted by Teck identified up to 12 veins. From sub crop and trenches, veins appear to be typically 0.5 m to 4 m in width with ENE and WNW strikes. The strike of these veins is the same as the structures that host the high sulphidation mineralisation at the Company's Guanaco mine, 55km to the NE. The best exposed vein, the E-W "Mono Vein", contains grab samples up to 3.9 g/t Au, dips variably steeply south, and is traceable for greater than one kilometre of exposure. The vein consists of a prominent 0.5 m to 2 m thick central vein, with local sheeted and brecciated vein-veinlet zones extending outwards from its central portion for several metres. The central vein is commonly brecciated and re-silicified with multiple episodes of banded quartz. In 2007, Teck drilled 21 shallow diamond drill holes totaling 1,955m and four RC holes totaling 800m. Along the Mono Vein, 19 angle holes were drilled with highlights including 1 m @ 3.5 g/t Au and 7.8 g/t Ag (PRA-005); 1.15 m @ 1.6 g/t Au (PRA-010) and 1.1 m @ 1.1 g/t Au (PRA-010). Diamond drill holes were less than 150 m in length, and cut mineralised structures at a maximum 90m depth from the surface. Significant portions of the property lie under cover to the south and south east.
The above results are historical and are not JORC Code compliant. A competent person has not done sufficient work to verify these results and it is uncertain these results could be used as part of any of the Company's future work program in the area. Any future work and results reported by the Company will be compliant with JORC Code.