Comet Resources Limited (ASX:CRL) is progressing due diligence related to a binding heads of agreement (HoA) with El Alamo Resources Limited (EARL) for the proposed acquisition of Santa Teresa Gold Project in Mexico.
The company is concurrently executing a non-binding term sheet with Raptor Capital International Limited for a gold streaming and royalty financing to fund activities at the project for up to US$20 million with an initial minimum of US$6 million.
“Finalising the transaction”
Comet managing director Matthew O’Kane said: “Over the last four weeks since we announced the signing of the HoA for the Santa Teresa Gold Project and Raptor financing, we have been working hard on advancing the due diligence workstreams with a view to completing them as soon as possible.
“I am focused on completing all required work in quarter three and am looking forward to finalising the transaction in what is shaping up to be a very interesting gold market in the second half of this year.
“Comet is in discussions with professional mining consultancy firms with resources in-country, who will be able to manage the company’s planned work programs following completion of the acquisition.”
Plans for initial fieldwork in quarter four are being prepared.
The acquisition will be completed on a staged basis, with Comet acquiring a 50% interest upon satisfaction of due diligence and the initial US$6 million financing being made available to the company, with the remaining 50% interest to be acquired upon a decision to mine.
Since the initial announcement, the company has agreed the deemed issue price of shares as consideration for the acquisition.
Deemed issue price for acquisition of the first 50% interest in the project will be 2.5 cents per share and the price for the second 50% interest will be equal to the volume-weighted average price of shares over the 20 days prior to the date of issue of the shares.
Santa Teresa Project location
Santa Teresa project
The high-grade Santa Teresa Gold Project is comprised of two mineral claims totalling 202 hectares in the gold-rich El Alamo district in Baja California, Mexico.
The project is prospective for high-grade gold, with an existing inferred resource of 64,000 ounces at an average grade of 8.7 g/t, reported at a cut-off grade of 4 g/t.
In addition to the two claims of the project, two additional claims totalling a further 378 hectares in the surrounding El Alamo district are proposed to be acquired from EARL.
Placer gold deposits of the El Alamo district were discovered in 1888 and high-grade ore-shoots were discovered on the Aurora-Princess vein within a year.
Lode mining continued until 1907 after which leases were worked until 1912 when mining ceased because of the Mexican Revolution.
The reported gold production of the El Alamo district has been estimated at between 100,000 and 200,000 ounces of gold.
Historical drilling programs at the project have generated multiple high-grade intercepts, highlighting the potential exploration upside to the current resource, which is open at depth and along strike.