BGL26 Nov 2012 07:01
Bullabulling Gold Limited ("Bullabulling Gold" or the "Company") advises that it has agreed to acquire mining lease M15/552 from Resolute Mining Limited in exchange for 13.5 million ordinary shares ("Acquisition Shares") in Bullabulling Gold.
M15/552 is situated immediately west of the Bullabulling gold deposit and is surrounded on three sides by Bullabulling Gold's existing tenements. While the main body of mineralisation being targeted for development by Bullabulling Gold is located within the Company's existing tenure, work carried out during the pre-feasibility study indicates that the optimal open pit crest would encroach on M15/552 such that a portion of the targeted resource could not be extracted without access to this tenement.
Control of M15/552 also provides Bullabulling Gold with additional growth opportunities. The Bullabulling gold deposit dips west towards M15/552 and remains open down dip, with drilling to date already intersecting mineralisation beyond the limit of the current resource. Furthermore, the southern extension of the Bullabulling trend, which has not been extensively explored, is closer to M15/552 and mineralisation is known to cross the lease boundary at a relatively shallow depth, particularly at the Edwards Prospect where the resource grade is higher than the Bullabulling average.
Bullabulling Gold's future exploration of the southern trend, including potential down dip extensions to the Edwards Prospect, will no longer be constrained by the tenement boundary. Bullabulling Gold will now also have greater flexibility in placing waste rock dumps, haulage roads and other infrastructure, which may lead to improved project economics, particularly where haulage distances can be reduced.
The acquisition remains conditional on Bullabulling Gold completing due diligence within ten business days. Upon completion of the transaction, Resolute will hold 4.5% of Bullabulling Gold's equity as enlarged by the Acquisition Shares. Following completion the company will make application for the Acquisition Shares to be admitted to the ASX and AIM and the Company will have a total of 302,533,871 Ordinary Shares on issue. Bullabulling Gold will assume Resolute's obligation to pay a royalty to Pacific-Nevada Mining Pty Ltd equivalent to one percent of the value of gold produced and sold directly from M15/552. This obligation will not apply to additional gold produced from the Company's other tenements as a result of being able to access M15/552.