Perth based explorer Empire Resources (ASX:ERL) has entered into a staged sale agreement for 100% of its Penny’s Find gold project, located north east of Kalgoorlie, with unlisted company Brimstone Resources .
At the election of Brimstone, the sale consideration comprises either:
- Staged cash payments totalling $2.0 million for a 100% interest of the Penny’s Find project.
- A royalty will also be payable on gold produced in excess of the current JORC resource of 52,500 ozs gold.
OR
- Staged cash payments totalling $0.5 million together with exploration and development expenditure of up to $3 million for an 80% interest in the Penny’s Find project.
- Any additional development costs associated with ERL’s residual 20% interest will carried by Brimstone and repayable from the proceeds of future gold production.
An initial $15,000 payment has been made by Brimstone with a further payment of $85,000 due within four weeks and another payment of $400,000 due prior to 31st December 2010 to earn a 40% interest in the project.
Brimstone must then continue funding exploration and development work by expending up to $3 million by 31st December 2013 to earn an 80% interest in the project.
After expending $1.5 million by December 2012, Brimstone can elect to purchase 100% of the project for $1.5 million plus a 2% gross royalty on gold produced in excess of the current JORC resource of 52,500 ozs gold.
The royalty would only apply when the gold price is above A$700/oz up to a maximum of A$50/oz.
David Sargeant, managing director for Empire, said, “This deal enables us to concentrate our efforts on the Yuinmery copper-gold project in Western Australia where a recently announced acquisition has trebled the size of our holdings in this highly prospective base metal camp."
"We will now be devoting our efforts to testing a considerable number of high quality EM geophysical anomalies with programs of RC and diamond drilling. The aim of this work is to increase the size of our copper sulphide resource to justify developing a mine.”
At Empire’s wholly owned Yuinmery project, a previously announcment identified an Indicated and Inferred resource of 1,070,000 tonnes at 1.82% copper and 0.78g/t gold.
Additional drilling is also planned to follow up the Trajan discovery, where a recent reverse circulation hole intersected 5m at 3.1% copper and 0.38g/t gold.