- Junior explorer Carnavale Resources (CAV) has struck a deal with private miner Western Resources to snap up 80 per cent of the Kookynie Gold Project in WA
- The project area covers 21 square kilometres in the Kookoynie gold mining camp, near major mines controlled by the likes of AngloGold Ashanti (AAGG) and St Barbara Mining (SBM)
- According to Carnavale, exploration in the project area has been limited
- Under today's deal, Carnavale will pay a mix of cash and scrip to the seller, with the transaction valued at $875,000 at the company's open price this morning
- Carnavale will also need to complete a drilling program in the area before May 3, 2021, to earn the right to buy its 80 per cent interest
- Shareholders seem impressed with today's purchase, with Carnavale shares up 27.3 per cent higher and worth 0.7 cents each
Junior explorer Carnavale Resources (CAV) has struck a deal with private miner Western Resources to snap up 80 per cent of the Kookynie Gold Project in WA.
The project area covers roughly 21 square kilometres in the Kookynie gold mining camp that has historically produced more than 650,000 ounces of high-grade gold. The project itself comprises one exploration licence and two prospecting licences.
At the Kookynie project, however, historical exploration has been limited. According to Carnavale, the exploration licence saw some reverse circulation (RC) and aircore drilling by previous explorers back in 2001 and 2002. High-grade gold hits were recorded in this drilling, including a one-metre intersection grading 13.1 grams per tonne of gold.
As for the prospecting licences, Carnavale said only five shallow RC holes have been completed in one of the licence areas, reaching a maximum depth of just 56 metres. This drilling struck a three-metre intersection grading 2.35 grammes per tonne of gold.
Carnavale Executive Chairman Ron Gajewski said today's purchase is in line with the company's strategy to buy and explore high-quality exploration and development projects.
"Recent exploration success in the Kookynie region supports our view that this region is underexplored and has excellent potential for additional discoveries," Ron said.
"The company has recently strengthened the technical team to reposition the company and its exploration activities focused on gold and nickel," he said.
But at what cost?
After a 28-day due diligence period, Carnavale will pay Western Resources $100,000 and 37.5 million CAV shares as an option fee. From here, Carnavale has a 12-month option to gain its 80 per cent interest in the Kookynie project.
To gain its interest, Carnavale will need to complete a drilling program in the project area before May 3, 2021, and then fork out another $250,000 and 50 million shares to the seller.
At Carnavale's open share price of 0.6 cents this morning, this values the deal at $875,000, not including the costs of the drilling program and general project maintenance, which Carnavale will need to cover.
Carnavale said it is planning to kick off an aircore drilling program as soon as the due diligence process is finished.
In good company
The Kookynie project lies close to several projects bringing in solid results to junior explorer and big-caps alike.
The project is near Nex Metals' (NME) and Metallicity's (MCT) Leipold and McTavish deposits, as well as Genesis Minerals' Greater Ulysses project.
Moreover, AngloGold Ashanti's (AGG) 10-million-ounce Sunrise Dam is close by, as is St Barbara's (SBM) Gwalia project and Saturn Metals' (STN) Apollo Hill project.
Shareholders seem impressed with today's buy, with Carnavale shares trading 27.3 per cent higher with shares prices at 0.7 cents each.