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Comet Resources (ASX:CRL) - Managing Director, Matthew O'Kane
Managing Director, Matthew O'Kane
Source: The Market Herald
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  • Comet Resources (CRL) has executed a binding heads of agreement with El Alamo Resources for the acquisition of the Santa Teresa Gold Project
  • Santa Teresa is located in Mexico and it has returned high-grade gold grading up to 958.4 grammes per tonne
  • The company has also executed a non-binding term sheet with Raptor Capital International for royalty financing and gold streaming to fund activities at the project
  • Comet will receive up to US$20 million and will initially receive US$6 million so long as it deliver 15,000 ounces of gold
  • The acquisition of the project will be completed on a staged basis with the first 50 per cent to be acquired once due diligence has been completed and Comet receives the initial US$6 million from Raptor
  • The remaining 50 per cent will be acquired once a decision to mine has been made
  • Comet is down 5 per cent on the market and shares are trading for 1.9 cents each

Comet Resources (CRL) has executed a binding heads of agreement with El Alamo Resources for the acquisition of the Santa Teresa Gold Project.

The company has also executed a non-binding term sheet with Raptor Capital International for royalty financing and gold streaming to fund activities at the project for up to US$20 million.

Comet will initially receive a minimum sum of US$6 million.

Santa Teresa Gold Project

The Santa Teresa Gold Project is located in Baja California, Mexico, immediately south of the town of El Alamo.

The project is located within the Central Zone of the Peninsular Ranges Batholith and is underlain by quartz diorite.

Exploration in 2008 from Premier Gold Mines consisted of a diamond drilling program that included 32 holes, for 7025 metres.

Results from this program included one metre at 958.4g/t gold from 239 metres, and one metre at 125.9g/t gold from 83 metres.

Santa Teresa has an existing non-JORC inferred mineral resource estimate of 64,000 ounces of gold at an average grade of 8.7g/t gold.

“Santa Teresa contains attractive near-surface high-grade gold mineralisation that is open along strike and at depth,” Managing Director Matthew O’Kane said.

“Along with the non-dilutive development funding from Raptor, I believe subject to due diligence, the project has potential to add significant value to Comet,” he added.

Terms of Santa Teresa Acquisition

The acquisition of Santa Teresa will be completed on a staged basis with 50 per cent being acquired once due diligence has been completed and Comet receives the initial US$6 million from Raptor.

The remaining 50 per cent will be acquired once a decision to mine has been made.

Comet has already paid El Alamo A$25,000, which it did when the heads of agreement was executed, and A$275,000 once it signs a gold streaming agreement with Raptor.

El Alamo will also receive the lesser of A$1 million worth of Comet fully paid ordinary (FPO) shares, or 19.9 per cent of then issued capital in FPO shares, and AUD$200,000 in cash once Comet receives 50 per cent of the project.

El Alamo will receive a final A$1 million cash payment when Comet receives the final 50 per cent.

Additionally, Comet will pay A$1 million to El Alamo on the production of the first 50,000 ounces of gold from Santa Teresa.

El Alamo will be entitled to a one per cent NSR (net smelter return) royalty of all gold extracted from the project over areas it currently holds.

Terms of Raptor Financing

To receive the initial US$6 million advance, Comet needs to deliver 15,000 ounces of gold and once this is complete Raptor will receive a NSR royalty of 2.5 per cent.

Comet will use this money to fund development activities at Santa Teresa and any other tenements that are acquired in the region.

Proposed Issue of Shares

The Board has approved the issued of 21 million options to the Management and Board.

This will be undertaken in two phases with phase one issuing 50 per cent at a price of 1.8 cents, and the remaining 50 per cent at a price of 2.2 cents.

A total of 12 million options will be issued to the Managing Director, and each Non-Executive Director, and the Chairman, will receive three million each.

However, this is subject to regulatory and shareholder approval.

Comet’s shares have dropped 5 per cent and are trading for 1.9 cents each at 11:58 am AEST.

CRL by the numbers
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