De Grey Mining Limited (ASX:DEG) has expanded its gold exploration potential in WA’s Pilbara region by signing an agreement with Novo Resources Corp (CVE:NVO) (OTCMKTS:NSRPF) (FRA:1NO).
The binding letter of intent (LOI) includes gold-bearing lag gravel deposits across much of De Grey’s large land position.
Canadian-based Novo and its new joint venture partner Sumitomo Corporation are exploring the Egina lag gravels project immediately south of De Grey’s project.
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The LOI allows De Grey to utilise Novo’s specialised experience and add value through the search for near-surface gold-bearing lag gravel deposits.
De Grey’s technical director Andy Beckwith said: “The agreement adds value to De Grey shareholders through an active exploration program on the lag gravel potential managed by specialist explorer Novo.”
The company remains focused on establishing further gold resources and future development from the extensive shear zone and intrusion related gold bedrock targets.
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Beckwith said: “Over the coming months, Novo plans to evaluate the shallow gravels at the Egina project immediately south of us.
“Subsequent application of this experience will be immensely valuable when applied to De Grey’s land package.”
LOI conditions
Novo has the right to explore De Grey’s project for gold-bearing lag gravel deposits for an initial three years by paying $1 million, of which $300,000 will be held in escrow by Novo until De Grey acquires Indee Gold Pty Ltd.
Before this initial period expires, Novo may elect to extend its exploration rights for another two years by paying an additional $1 million.
Novo can then elect to continue to extend its exploration rights in two-year increments by paying an additional $1 million per extension period, subject to successful submission of a mining lease application or De Grey’s waiver of this condition.
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De Grey remains the primary tenement holder.
The Indee Gold mining tenements, existing resources including a 300-metre buffer around each deposit and any future mining lease related to these existing resource areas, in situ hard rock conglomerate gold targets and an existing third-party gravel right are excluded from the LOI.
Green shaded areas are De Grey 100% tenure and yellow areas are Indee Gold tenure, subject to acquisition by De Grey.
“Excited by potential”
Novo chairman and president Dr Quinton Hennigh said: “Through this option arrangement, we have effectively added around 1,100 square kilometres of additional exposure to gold-bearing lag gravels in the region, a significant focus of Novo’s current exploration program.
“Over the coming months, we plan to evaluate the gold content and continuity of shallowly occurring gravels at Egina.
“Our program can now be expanded to test areas on this newly optioned ground. Although an unusual style of gold mineralisation, we are very excited by the potential the terrace gravels have to offer.”