Silver Lake Resources (ASX: SLR) is a gold producing and exploration company with a resource base of 4.5 million ounces in highly prospective regions including the Mount Monger and Murchison goldfields, and the Great Southern district of Western Australia.
Silver Lake Resources (ASX: SLR) now has a third potential gold production centre to focus its efforts on following the ramp up of its Mount Monger project and the development of the Murchison Project in 2013.
Importantly, this gold centre already hosts a JORC Resource of 1 million ounces of gold, 10 million ounces of silver and 95,000 tonnes of copper.
Silver Lake Resources has now completed the asset sale agreement with Phillips River Mining (ASX: PRH), which takes the company’s total JORC Resources to 42.6 million tonnes at 3.3 grams per tonne (g/t) for 4.5 million ounces of contained gold.
The agreement covered the acquisition of Phillip River’s Kundip gold project and other mining tenements and assets unrelated to the Trilogy project, as well as the Trilogy polymetallic project, including surrounding tenements, the Myamba farm and infrastructure on the Myamba farm.
The Phillips River assets are now collectively known as the Great Southern Gold Project, which comprise two discreet exploration projects, Kundip and Munglinup covering over 2,500 square kilometres of tenements located in the southeast of Western Australia.
The Kundip Mining Centre hosts two main ore bodies within 10 kilometres of each other that have been subject to a Definitive Feasibility Study (DFS).
The Trilogy orebody is a polymetallic deposit located on cleared freehold farmland. At this stage, Silver Lake does not view Trilogy as a priority and will not be pursuing the DFS to develop the deposit.
Kundip constitutes a number of high grade gold ore bodies. These deposits have been mined in the past on a small scale, producing 121,000 tonnes at 18g/t for 68,000 ounces of contained gold from both underground and open pit sources that are underexplored at depth.
Further exploration upside at Kundip exists in the potential for further high grade gold deposits to be discovered through a systematic and ramped up exploration campaign.
Kundip hosts a current JORC Resource of 8.9 million tonnes at 2.7g/t for 0.8 million ounces of contained gold.
The DFS for Kundip delivered a probable Reserve of 2.8 million tonnes at 3.4g/t for 307,000 ounces of contained gold, with an average copper grade of 0.4%.
The Reserve is made up of three deposits at Kaolin, Flag and Harbour View with designed open pit mines followed by underground mines.
Following the ramp up of Mount Monger and development of the Murchison in 2013, Silver Lake will increase regional gold exploration at Kundip.
The aim is to establish a third gold mining centre with potential copper and silver credits.
Work will also assess a low capital operating scenario with a simple and straight forward processing circuit.
Silver Lake’s exploration strategy is threefold – the company will focus on infill drilling to convert current resources to reserves; extensional drilling to expand the current resources; and step out drilling to delineate new resources.
Munglinup is a large greenfield exploration project covering over 1,600 square kilometres located in the Albany Fraser belt, one of Australia’s major gold belts which hosts AngloGold Ashanti and Independence Group’s (ASX: IGO) 5 million ounce Tropicana deposit located 500 kilometres to the northeast.
The tenement package is on cleared agriculture ground with shallow cover and is essentially unexplored.
A 200 hole rotary air blast surface drilling program was completed in May 2012 with assays pending.
Terms of the Phillips River deal
Silver Lake has issued Phillips River 5.2 million shares as consideration for the purchase of the assets, valuing the transaction at around $15.1 million based on the last traded share price.
As part of the deal, the existing board of Phillips River has resigned and the entire board of Silver Lake has been appointed as directors of Philips River.
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