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Breakaway Resources in strategic gold JV agreement with Aphrodite Gold at Scotia

Published: 09:28 16 Jun 2011 AEST

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Breakaway Resources (ASX: BRW) has signed a farm-in and joint venture heads of agreement with Aphrodite Gold (ASX: AQQ) for the gold rights over Breakaway’s Scotia Project in Western Australia.

Aphrodite will be able earn up to an 80% interest in the gold rights by spending $1.5 million over a period of up to 4 years with Breakaway free carried until the decision to mine.

The agreement is in line with Breakaway’s strategy of maintaining its focus on its core copper and nickel exploration projects in the Cloncurry District and Leinster District of Queensland and Western Australia.

David Hutton, Breakaway’s managing director, said the collaboration with Aphrodite will helped realise the value of the gold asset at Scotia.

"The agreement will result in a major evaluation of Scotia’s gold potential, with Breakaway retaining exposure to any upside from a significant discovery at a time of strong exploration and investor interest in the gold sector."

Aphrodite is now planning to kick off an aggressive 3,000 to 5,000 metre Reverse Circulation (RC) drilling program testing the Chameleon prospect shortly.

The potential at the project is underlined by the historic drill intercepts at the Chameleon prospect, which lies within the Scotia Project’s boundaries.

Historic intercepts of up to 22 metres at 5.43 grams per tonne (g/t) gold and 29 metres at 3.40g/t gold have been received at Chameleon.

Importantly, mineralisation remains open both at depth and along strike.

The Scotia Project is located about 70 kilometres northwest of Kalgoorlie in the North Eastern Goldfields, and is highly prospective for gold as it lies within the Bardoc Shear Zone.

Significantly, the zone is a large regional structure which hosts numerous gold deposits including Aphrodite Gold’s over one million ounce (Moz) Aphrodite Deposit (five kilometres to the west) and the +5Moz Paddington Deposits (about 30 kilometres to the south).

The drilling at chameleon, which borders Aphrodite's projects, aims to extend the geological continuity.

At Chameleon, gold mineralisation occurs within a steeply dipping, north plunging shoot that has been previously drilled on nominal 50 metre centres, over 300 metres strike and to a depth of 200 metres.

Under the terms of the farm-in and joint venture heads of agreement:

· Breakaway retains the rights to all other minerals including nickel.
· Aphrodite can earn an initial 51% interest in the Scotia Project’s Gold Rights by spending $400,000 within the first twelve months with a minimum of $300,000 to be spent by 31st July 2011.
· Aphrodite can earn an additional 29% interest in the Scotia Project’s Gold Rights (for a total 80% joint venture interest) by spending a further $1.1 million on exploration, or when the joint venture parties make a decision to mine, whichever occurs earlier.
· Upon electing to earn an additional 29% interest, Aphrodite must, as a minimum, spend each year, the Scotia Project’s aggregate expenditure commitment of approximately $360,000.
· Breakaway will be free-carried at all times until a decision to mine.
· On a decision to mine Breakaway may elect to contribute to a mining joint venture operation or elect to transfer its interest to Aphrodite in exchange for a 1.5% Net Smelter Royalty.

On May 31 Breakaway commenced a highly anticipated 5,000 metre RC drilling program to test three advanced high-grade copper-gold prospects at its 100%-owned Eloise Exploration Project in North Queensland.

Breakaway Resources One2One Investor Presentation 31 May 2011

David Hutton of Breakaway Resources updates investors at the AMEC & Proactive Investors "One2One Investor Briefing" in Melbourne on 31 May 2011

on 1/6/11