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Drummond Gold farms in to Bendigo region gold exploration

Drummond Gold farms in to Bendigo region gold exploration

Drummond Gold (ASX: DGO) has entered into a farm in agreement to explore for sediment hosted gold mineralisation under shallow cover in the Bendigo region of Victoria.

The exploration activity will focus on the historic and current gold mining areas of Unity Mining (ASX: UML), formerly Bendigo Mining Limited.

The initial exploration effort will consist of reviewing past exploration activity, reinterpretation of airborne magnetic and gravity data and regional geology followed by drilling.

Under the agreement Drummond are to meet a minimum expenditure of $500,000 on the Bendigo region by 30 September 2011.

Drummond has the right to withdraw from the farm in agreement at any time after meeting its minimum expenditure.

Drummond has the right to earn a 51% interest in the Bendigo region by spending a further $5 million within 3 years.

After earning a 51% interest in the Bendigo region, Drummond has the right to earn a further 19% interest taking its interest in the Bendigo Region to 70% by spending a further $3 million in the following 2 years.

If Drummond earns a 51% interest or a 70% interest in the tenements, both companies will contribute to the Bendigo region on the basis of their respective interests in the tenements or dilute under a standard dilution formula.

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