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Stratum Metals signs 'company making' agreement in the East Menzies Goldfield  Join our daily free Newsletter

MENAFN - ProactiveInvestors - Australia - 18/11/2012

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(MENAFN - ProactiveInvestors - Australia) Stratum Metals' (ASX:SXT) managing director Martin Holland has orchestrated a 'company making' deal in the highly prospective East Menzies Goldfield on Western Australia - by consolidating 11 different entities.

Stratum has signed a Binding Heads of Agreements with two separate consortia bringing together 54 tenements, including 2 mining licences, under the one group.

The significance of the deal is that Stratum can now combine all of the data and conduct an overall aerial survey - of which has never been done before on this scale.

Where the story becomes even more interesting is that the combined area has potential for near term production generating significant cash flow - which would transition the company to a self-funded explorer.

This includes a near surface 36,000 ounce resource which could be extracted and trucked to one of the nearby processing centres within trucking distance, following any potential ore agreements.

Stratum said that the initial review indicates significant potential to expand on known resources and follow up a large range of already identified geochemical gold anomalies.

Highlighting more potential, a TEM geophysical survey was conducted on M29/189 in 2008 defining moderate to strong anomalies with characteristics indicating potential massive sulphide mineralisation.

Another plus is that the area contains the Granny Venn-Aunt Nellie open pit mines plus over 100 historic gold workings.

Capital raising

In order to progress the Menzies consolidation and move to production Stratum will raise up to A5,000,000 through current shareholders, brokers and strategic investors (domestic & international).

Martin Holland spoke to Proactive Investors today, and said that an international contingent will be making a site visit next week.


Due diligence

Successful acquisition of the East Menzies tenement portfolio will be based on Stratum identifying a clear low cost path to production and associated cash flow.

The board recognises significant potential in the proposed acquisition and will now commence extensive technical due diligence. This project will give Stratum the opportunity to take a step up to producer status and provide a solid foundation for future growth.


Potential for near term cash flow

The Goodenough area has been the subject of a large amount of work by past tenement holders, ranging from various rotary air blast and reverse circulation drilling programs to historic small scale open pit and underground mining.

In 2004 Yilgarn Gold Ltd released a then JORC classified resource estimate for Goodenough (M29/141) of 546,000 tonnes at 2.07g/t for around 36,000 ounces.

Based on the Yilgarn Gold Ltd resource estimate a mining optimisation study was completed at a gold price of AU560, with the assumption of toll treatment at Leonora, at the time a suitable mining option was not realised.

Now with the gold price close to A1700 an ounce - this can now become a reality.


Specifics of the transaction

Terms with Resource Assets Pty. Limited:

1st payment

- AUD50,000 non-refundable instalment paid to secure 45 day due diligence period
2nd payment
- AUD150,000 payable to proceed beyond due diligence period
Final Consideration for the acquisition:
- AUD1,800,000
- The greater of 5,000,000 shares or AUD750,000 worth of shares priced at 15 day VWAP
on acquisition completion
- Acquisition completion date 28 February 2013

Terms with Riqo Pty. Limited

1st payment

- AUD50,000 non-refundable instalment paid to secure 45 day due diligence period
2nd payment
- AUD 50,000 payable to proceed beyond due diligence period
Final consideration for the acquisition:
- AUD200,000
- 5,749,285 shares (issued at 25c per share)
- 500,000 options (exercisable at 25c)
- Acquisition completion date 28 February 2013
Please view map on the next page to review the respective landholdings for Resource Assets Pty. Limited and Riqo Pty. Limited.


Analysis

Stratum has the board, management and strategic shareholders to support this company making strategy, and by consolidating such a vast amount of tenements already highlights the negotiation and company development skills required to deliver to shareholders.

Once the agreement is finalised, the company will have an opportunity to commercialise multiple modest resources that may be defined across the area.

There is reportedly a huge amount of data associated with past exploration and small scale mining completed on the various tenements, which has not been considered as a single body of data by past explorers.

Stratum is now in a position to achieve this.

With international investors visiting the site next week - the company has already achieved the first steps in raising 5 million.

The project will give Stratum the opportunity to take a step up to producer status and provide a solid foundation for future growth.

 






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