Krakatoa Resources Limited (ASX:KTA) has entered a binding term sheet with Locksley Holdings Pty Ltd to acquire 100% interest in exploration licence 8153, which covers an area of 80 square kilometres and contains the Belgravia Project.
Terms of consideration
Included in the term sheet is a 21-day option period to undertake due diligence on the project for consideration of $10,000.
Once satisfied and the option exercised, Krakatoa can acquire Belgravia for 10 million ordinary shares, $300,000 cash and a 1% net smelter royalty.
10 million quoted options exercisable at 5 cents a share on or before July 31, 2021 will be issued upon completion to the facilitator of the transaction King Corporate Pty Ltd.
Due diligence activities underway
Exploration will focus on discovery of large tonnage, moderate grade copper-gold porphyry and high-grade copper-gold skarn deposit styles.
Six targets have been generated within the project area by the vendor, with some bearing similarities to Cadia.
Krakatoa will utilise its 21-day due diligence period to review and validate these targets.
Due diligence activities utilising the company’s technical consultants have started and once complete, Krakatoa plans to rapidly progress to drilling.
Exploration expert engaged as consultant
The company has also agreed to enter a consulting agreement with Stephen Woodham once the transaction is complete.
Woodham has over 30 years’ experience in mining and exploration across Western Australia and New South Wales, specialising in field logistics and support and land access in rural and remote environments.
He has secured projects that have resulted in significant gold discoveries in NSW and was a founding director of LFB Resources which was taken over by Alkane.
Province holds significant metal endowments
Belgravia is in the central part of the Molong Volcanic Belt (MVB) within the East Lachlan province, which also hosts major copper-gold mining operations with significant metal endowments.
These include Cadia East Underground with total resources of 34 million ounces of gold and 7.6 million tonnes of copper, Cowal and Northparkes, as well as exploration and development projects such as McPhillamys, Marsden, Temora, Copper Hill and Tomingley.
It sits along trend about 70 kilometres south of Alkane’s recent porphyry discovery which displayed significant gold-copper porphyry mineralisation intercepts and “clear evidence of Cadia-style mineralisation and grade over hundreds of metres”.
The project also is along trend about 40 kilometres north of Newcrest’s Cadia Valley Operations.
Four major porphyry systems identified
Porphyry and related skarn mineralisation within the East Lachlan Belt is associated with intermediate magnetism, followed by Silurian regional metamorphism and deposition of orogenic gold deposits.
Four major porphyry systems have been identified in the MVB: Cadia, which holds Newcrest Mining’s Cadia Valley Operations; Copper Hill, which underlies Belgravia, as well as Cargo and Boda.
Nearby deposit supports prospectivity
Belgravia contains parts of the Copper Hill Igneous Complex (CHIC) which locally hosts the Copper Hill deposit with a total resource of 87 million tonnes at 0.32 g/t gold and 0.36% copper.
Copper Jill is the oldest mined copper deposit in NSW.
CHIC comprises appropriately aged and oriented intrusive rocks and shares many other geological similarities to the Cadia Intrusive Complex to which it is considered analogous.
Drilling at Copper Hill has outlined a diffuse body of mineralisation, extending north-northwest for more than two kilometres up to 800 metres wide and extending to depths of more than 400 metres.
Limited historical exploration
Four deposit types are prospective at Belgravia: porphyry copper-gold; associated skarn copper-gold; orogenic gold; and volcanogenic massive sulphide gold mineralisation.
Historical work has included geological mapping, soil and rock chip sampling and only nine aircore holes for 101.5 metres across the entire project.
No assay data is available on the aircore holes but with up to 40 metres of basalt cover, these are considered insignificant.