Hexagon Resources Ltd (ASX:HXG) has entered into a binding purchase agreement to acquire a 75% interest in exploration licence ELA80/5126, contiguous to its Halls Creek Gold Project in Western Australia.
The tenement hosts prospective continuous geology and fills a gap in Hexagon’s tenure of permits, which are prospective for gold and gold-copper mineralisation.
Jointly owned by two private entities, the land will be purchased by Hexagon’s wholly-owned subsidiary Halls Creek Resources Pty Ltd for a total of $20,000 plus a 1.5% net smelter return royalty.
Hexagon will also have a call option to acquire the outstanding 25% for either $25,000 cash or Hexagon shares worth $30,000 within 2 years of the tenement being granted and the joint venture being formed.
Strong gold price highlights project’s potential value
Hexagon managing director Mike Rosenstreich said the company was pleased to have consolidated its Halls Creek tenure, filling in eastern extensions of the high-grade Lady Helen gold prospect to the Granite prospect.
The company’s focus is developing its downstream graphite processing business supported by its upstream McIntosh Project, but the recent strong rise in the gold price to over $2,300 an ounce has highlighted the potential value of the Halls Creek project.
Historical exploration has defined numerous high-grade outcrops within the tenement package, most of which have never been drilled.
The consolidation allows for more efficient and cost-effective regional exploration programs targeting major gold-bearing structures and Hexagon is investigating the viability of an airborne magnetic survey to generate new drill targets.
“Significant contiguous land position”
Rosenstreich added: “Hexagon now holds a significant contiguous land position that we believe is highly prospective for gold and base metals and possibly nickel mineralisation.
“We have noticed a renewed interest in the Kimberley region, driven by recent regional successes such as Pantoro Limited’s discoveries and strong gold price gains.
“While Halls Creek is not our core focus, there is a tremendous opportunity to add shareholder value for a modest spend to collect high-quality data and hopefully attract a well-credentialed exploration partner to take the project forward.”
Airborne magnetic surveys to provide important data
Hexagon has approved expenditure to fly, process and interpret high-resolution airborne magnetic and radiometric data of the consolidated tenements.
This will provide the company with a high-quality data set on which to base an updated litho-structural interpretation, critical for detailed target generation and pre-drilling refinement work.
Aerial surveys are planned to finish in September and the interpretations are expected in December.
Numerous high-grade historic results
Covering a 571 square kilometre area, the Halls Creek project has had very little systematic exploration and several high priority targets and new prospective zones have been identified.
This includes the Lady Helen gold-silver prospect where very high grades up to 4 metres at 22.6 g/t gold and 17.3 g/t silver from surface were returned from historic exploration work.
Previous rock chip sampling has returned grades up to: 26 g/t gold at the Townsite prospect; 10.7% copper at Milba; 1.3 g/t gold at the Bent Ridge prospect; and 36 g/t gold and 47 g/t silver from Lady Helen.
The Granite prospect, which lies along the Lady Helen contact zone and within the newly acquired tenement, has returned samples grading 11.5 g/t gold.
High-grade gold assays reported near new tenement
The east Kimberley region around Halls Creek has seen substantial gold production since gold was discovered in 1885.
Pantoro Limited’s (ASX:PNR) nearby Nicholson Gold Project began production in September 2015 and has a current production rate of 50,000–55,000 ounces a year, forecast to increase to 80,000 ounces.
Pantoro has reported high-grade gold results from its Mary River and Grants Creek prospects which are immediately south and north along strike, respectively, from Hexagon’s Halls Creek tenements.