Acquisition of Berringa Gold Mine Complete

RNS Number : 3485A

Red Rock Resources plc

22 September 2022

 

22 September 2022

Red Rock Resources PLC

("Red Rock" or the "Company")

Acquisition of Historic Berringa Gold Mine Complete - Victoria, Australia

Red Rock Resources Plc, the natural resource development company with interests gold and base metals, principally in Africa and Australia, announces an update in relation to its joint venture ("JV") subsidiary New Ballarat Gold Corporation PLC ("NBGC"), which is focused on the prolific Victorian Goldfields of Australia. The JV is held between Red Rock (50.1%) and its partner, AIM-listed Power Metal Resources Plc (49.9%). 

Red Rock Australasia Pty Ltd ("RRAL"), the 100% owned Australian operating subsidiary of NBGC, entered an agreement ("Agreement") on 6 July 2022 to acquire the exploration licence EL5535 covering the historic Berringa Mine ("Berringa" or the "Project") from Balmaine Gold Pty Ltd ("Vendor") which is a wholly owned subsidiary of Golden Point Group Pty Ltd ("GPG"), itself the subsidiary of Shen Yao Holdings Ltd, a company listed on the Singapore Exchange (the companies collectively being the "Vendor Group").

The original announcement of the Agreement on 6 July 2022 may be found at https://www.londonstockexchange.com/news-article/RRR/victoria-gold-jv-berringa-mine-acquisition/15528928

ACQUISITION COMPLETION

· EL5535 has now been successfully transferred to RRAL, which now holds a 100% interest in the exploration licence.

· RRAL has paid the initial consideration of A$20,000 to the Vendor, with further milestone consideration payments detailed in the Further Information section below.

· RRAL are finalising a detailed exploration plan for the period up to and following the five year renewal being applied for to the licence which expires on 16 November this year.

· The exploration plan will include planned drilling at EL5535, and will be designed to test for extensions of known gold mineralisation at the Berringa Gold Mine which has historical production of 293,250 ounces of gold (Au) from 1898-1952 at an average grade of 8.3g/t Au.¹

· The focus of planned drilling will be to demonstrate the remaining gold endowment which, as outlined in 2004 and 2014 technical reports, includes possible exploration target ranges down to 1000m of 0.91 to 3.89million^*,** and 0.70 to 2.91million^*,** ounces of Au respectively.^1,2 Further details in respect of these exploration targets are provided below.

· Further announcement will be made once the  exploration and funding  proposals are finalised.

· RRAL is in ongoing discussions with the Vendor Group, regarding the possibility of processing ore at their nearby Ballarat Gold Mine (located approximately 25km away) should RRAL discover and develop an economic deposit. This arrangement would dramatically reduce both mine build-out time horizons and heavy capital requirements for building a new standalone processing facility.

Andrew Bell, Chief Executive Officer of Red Rock comments:

"There is no greater evidence of prospectivity than licences which contain former working high grade mines and RRAL has two with the Ajax Mine and now the Berringa Mine after the completion of the acquisition of EL5535 which encompasses the Berringa Mine footprint.

The combination of blue sky exploration opportunitiess, small historic mines and workings with potential extensions, and the yet to be assessed gold endownment across large former working mines makes for a strong portfolio of opportunities that can support a multi-year programme of exploration and development. Add to this RRAL's talented and driven team based out of the Ballarat office who lead our in-country project exploration there is a unique business opportunity which we are pushing hard to advance at some pace.

Planned drilling at Berringa is looking to unlock what the RRAL technical team think may be considerable remaining gold endowment and, subject to local approvals, seek to produce gold using existing third party processing facilities."

FURTHER INFORMATION

Exploration Licence 5535 was previously held by Balmaine Gold Pty Ltd, which is a wholly owned subsidiary of Golden Point Group Pty Ltd ("GPG"), itself the subsidiary of Shen Yao Holdings Ltd, a company listed on the Singapore Exchange (the companies collectively being the "Vendor Group").

GPG are the owners of the nearby Ballarat Gold Mine, which has annual production guidance of 40,000 to 50,000 ounces of gold per year.⁴

The Vendor Group's licence has its origins in the acquisition of the tenement area in 1998 with the view of the tenement supplying additional gold to the nearby Ballarat Mine. After passing through Lihir Gold, the tenement came into the hands of the Vendor Group. The mining licence was surrendered in 2014, with an exploration licence covering the same area then being granted to the Vendor. For various reasons, the work on the tenement has not been as extensive as planned.

A 2004 Berringa Exploration Strategy Technical report was produced by Hamish Forgan & Steven Olsen on behalf of a previous owner of the Licence, Ballarat Goldfields NL ("Ballarat Goldfields"). Mr Olsen was an employee of Ballarat Goldfields and a compent person as defined by the JORC code. The 2004 report highlighted a proposed exploration target ranging from 913,488 to 3,889,718 ounces of gold down to a depth of 1000m at Berringa.²

Subsequently, on the surrender of the previous mining licence, a further technical report was prepared which summarised the findings from work undertaken from 1992 to October 2014. The 2015 report was produced by Jason Fothergill on behalf of the operators at the time Caslemaine Goldfields Pty Ltd.  Within the 2015 report, an updated proposed exploration target was calculated which ranged from 697,112 to 2,907,790 ounces of gold down to a depth of 1000m.¹ The results from this report are summarized in the below table.^*,**

Depth Extent	Theoretical tonnage	Assumed Grade	Target Size	Risk Weighted Exploration Target
0 - 300m	475 - 2,974k t	5.8 - 14.2g/t Au	554k oz. Au	217k oz. Au
300 - 600m	494 - 5,793k t	5.8 - 14.2g/t Au	1.080 Moz. Au	225k oz. Au
600 - 1,000m	558 - 6,827k t	5.8 - 14.2g/t Au	1.273 Moz. Au	255k oz. Au
TOTAL	1.5 to 15.6 Mt	5.8 -14.2g/t Au	2.907 Moz. Au	0.697 Moz. Au

*The exploration targets tabled above are not to be considered as an estimate of a Mineral Resource or Ore Reserve as those terms are defined in the JORC (2012) Code. The potential quantity and grade is conceptual in nature, that there has been insufficient exploration to estimate a Mineral Resource It is uncertain if further exploration will result in the subsequent estimation of any Mineral Resource. A drilling programme planned to test the valididy of the exploration target outlined above is currently being planned, and details will be included in the licence renewal application which will be submitted prior to the expiration date of 16 November 2022. Further updates regarding the proposed drilling programme will be supplied to the market in due course.

**The top end of the exploration target ranges produced represents the total ounce potential that would exist if each target area (0-300m, 300-600m, 600-1000m) had the same gold endowment as the historically mined orebodies at Berringa. Several risk factors were applied to the above calculation, which take into account the unknown location of various faults, folds and diltational jogs down to 1000m. The low end of the exploration target range reflects the full application of all calculated risk factors to the top end estimate.

Transaction Terms

For the purchase of 100% of the Vendor's interest in the Licence to RRAL, covering the historical Berringa Gold Mine, the following consideration is payable:

· The issue to the Vendor staged cash payments totalling AUD$500,000 as outlined below:

o  Initial payment of AUD$20,000 payable on successful transfer of the exploration licence to RRAL (COMPLETE).

o  On successful renewal of the Licence for an additional term of 5 years, which currently expires on 16 November 2022, an additional payment of AUD$130,000, which can be satisfied through the issue of either cash and/or publically traded shares.

o  On public release of a initial JORC Compliant resource estimate of greater than 100,000 cumulative ounces of gold in the Inferred category, a further payment of AUD$350,000, which can be satisfied through the issue of either cash and/or publically traded shares.

· Upon the successful commencement of commercial production, a 1.5% Net Smelter Return ("NSR") royalty will be issued to the Vendor over the Licence, with total payments capped at AUD$1,500,000 over the life of the NSR royalty.

· RRAL inherits the responsibility for a pre-existing 2.5% NSR Royalty, with total payments capped at AUD$50m, payable to Altus Strategies Plc.  This royalty is part of a wider royalty covering actual or potential gold production from a number of licences including that from the Ballarat gold mine.  Of the AUD$50m, to date AUD$14.5m has been received by the royalty holder and therefore AUD$35.5m of the capped amount remains.⁵

New Ballarat Gold Corporation

NBGC through its wholly owned local operating subsidiary RRAL holds a strong land position comprising 15 granted exploration licences for a total area of 1,841 km² within the gold fields of Victoria, Australia, principally around the mining centre of Ballarat.

5 licences covering 493km² await grant. The company has carefully assembled its portfolio of properties comprising a broad range from robust exploration targets to near term resource potential, all of which remain largely undeveloped by modern explorers.

With the first tenements granted only in 2021, RRAL has already conducted detailed exploration of its initial targets, including a diamond drill test of two prospects starting in December 2021.

References

¹ Final Technical Report Berringa Gold Project MIN 4191 Oct 2014. J Fothergill Balmaine Gold Pty Ltd

² Berringa Exploration Strategy Technical Report: Sept 2004, H Forgan 

³ Sharp, D. & Sheerin K: OreTech Mining Solutions - Tenement Review and Exploration Strategy - EL007330 Daylesford. Unpublished independent geologist report prepared for Red Rock Australasia Pty Ltd. (2020).

⁴ https://ballaratgoldmine.com.au/our-mine/

⁵ Royalty Overview Dashboard - Altus Strategies ( https://altus-strategies.com/projects/royalty-dashboard/caserones-2/ )

COMPETENT PERSON STATEMENT

The technical information in this report is compiled by David Holden, BSc, MBA, MEM, who is a member of the Australian Institute of Geoscientists and a director of NBGC, and the Exploration Director of RRAL. He is a member of a recognised professional organisation and has sufficient relevant experience to qualify as a qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies, published by AIM.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

For further information, please contact:

Andrew Bell 0207 747 9990  ChairmanRed Rock Resources Plc

Roland Cornish/ Rosalind Hill Abrahams 0207 628 3396 NOMAD Beaumont Cornish Limited

Jason Robertson 0207 374 2212                                               Joint Broker First Equity Limited

Thomas Smith 0207 392 1568                                                      Joint Broker OvalX  

 

END

 

 

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