(MENAFN - ProactiveInvestors - Australia) Alloy Resources (ASX: AYR) is growing the size of its Horse Well gold project in Western Australia with an option to acquire an 80% interest in an exploration licence adjoining the north-western part of the project.
The Horse Well project is strategically located around 50 kilometres north of Newmont Mining's 3 million ounce Jundee Mine along a highly prospective greenstone belt.
Alloy entered into an option agreement with Phosphate Australia (ASX: POZ), under which Alloy will pay an option fee of 25,000 and have two years to meet minimum annual expenditure commitments.
Alloy has also secured new tenure through an application for Exploration Licence 69/3069, adjoining its existing controlled tenure and the Phosphate Australia tenement.
The greenstone belt that hosts 100,000 ounces of gold resources within Alloys tenements some 15 kilometres to the south, extends north-westerly through the new tenement additions.
The exploration licence covered under the option agreement with Phosphate Australia covers over 20 strike kilometres of the belt.
The Crack of Dawn prospect located in the north-west of the project area, adjacent to the new tenements, has been prioritised as an area of strong interest for future exploration.
This prospect has a number of air-core drill anomalies with intersections including 11 metres at 3.45 grams per tonne (g/t) gold from 44 metres, 5 metres at 0.23g/t gold from 48 metres, 16 metres at 0.16g/t gold from 40 metres, and 4 metres at 0.24g/t gold from 48 metres.
Alloy is currently compiling and interpreting data from the area and is planning to begin heritage surveys and infill drilling before the end of the year.
Alloy can choose to exercise the option at any time during the two years by paying Phosphate Australia 25,000 cash and issuing 25,000 worth of shares.
The company may also withdraw at any time during the exercise period, contingent on meeting the minimum expenditure pro-rata at that time.
Alloy and Phosphate Australia will form a joint venture upon the exercise of the option, and Phosphate Australia will be free-carried to the completion of a Bankable Feasibility Study.
Phosphate Australia may then choose to contribute or dilute, and if the company's interest falls to 5% then its interest will revert to a 1.5% net smelter royalty.
Divesting non-core asset
Alloy has inked a binding term sheet with unlisted Pacific Mineral Resources to conditionally farm-out an 80% interest in EP 51803 in New Zealand.
Pacific Mineral Resources will pay Alloy 75,000 cash or issue 200,000 worth of shares in a publicly listed entity 12 months after commencement of the Farm-in Agreement.
The farm-in period is for two years during which Pacific Mineral Resources must deliver a positive Pre-Feasibility Study (PFS).
Upon completion of the PFS, Pacific Mineral Resources will pay Alloy 75,000 cash or issue 200,000 worth of shares in a publicly listed entity, and the companies will form a joint venture.
Alloy can then either elect to contribute or reduce to a 10% interest and be free carried to completion of a Bankable Feasibility Study, after which Alloy may contribute or dilute and if the company's interest falls to 5% then its interest will revert to a 1.5% net smelter royalty.