First Au Limited (“FAU” or “the Company”) announced that it had entered into an option agreement with Mines of Stirling Pty Ltd (“Stirling” or “the Vendors”) to acquire an 85% interest (diluting to 80.0%) in granted exploration license EL 5505 and prospecting license application PL 007319 (“Snowstorm Project”) (Refer Figure 1 and 2), located in East Gippsland, Victoria.
FAU recently announced its intention, subject to completion of due diligence and certain conditions, to acquire an 80% interest in VicGold Pty Ltd (“VicGold”) the owner of the Victorian Gold Project. The Snowstorm Project is located approximately 15 kms (30 minutes’ drive) directly north of the VicGold Haunted Stream Project. It has the same Ordovician-aged rocks as Haunted Stream, has historically yielded high-grade gold results and exhibiting similarities to the same gold targets as the Victorian Gold Project. Snowstorm contains Ordovician sediments (same as Haunted Stream), free gold and sulphide lodes and is “structurally controlled” with walk up drill targets once mapping is completed. Numerous mafic dykes are observed in the area and importantly, occur immediately adjacent mineralised quartz reefs.
The main targets identified to date include a series of fault hosted lodes occurring sub-parallel to bedding trending NW-SE. FAU has further identified a series of cross-structures that bear striking similarity to those of Haunted Stream, supporting the hypothesis that this Project Snowstorm area is highly fertile for auriferous deposits and reflects similar structural controls to those observed at Haunted Stream.
First Au Executive Chairman, Bryan Frost commented “The agreement with Mines of Stirling enhances our ground presence in the East Victorian Goldfields and provides us with immediate exploration access and drill targets whilst we await the grant of the other applications. In particular the Haunted Stream tenement area, where there has been an abundance of historical workings is now supported by new geophysics and a new geological theory. We are excited by the prospect of commencing modern exploration in this highly prospective gold producing area”
Under the agreement with Stirling, First Au has a two-year option secured, by the payment of $20,000, upon satisfaction (or waiver) of the last of the conditions precedent, a further $20,000 within 12 months of the satisfaction (or waiver) of the last condition precedent. First Au, at its sole election, can extend the option period for a further 12 months by the payment of an additional $40,000. First Au is required to spend $50,000 on exploration within the initial 12 months after completion and a further $50,000 within the following 12
months. In the event that FAU elects to extend the option period for a further 12 months, First Au would be required to spend an additional of $50,000 on exploration. Upon completion, a 5.0% free carried interest in the tenements will be transferred to Ian Neilson or nominee(s) (“Neilson Interests”) leaving First Au with an 80% interest. The Neilson Interest was granted in recognition of the work undertaken by him in respect to securing the Snowstorm Project for FAU and geological work performed in providing technical information for the Company.
Conditions include, FAU completing its due diligence within 30 days of signing, EL 5505 being renewed for a further term of not less than 3 years and the PL 007319 being granted.
Should First Au elect to exercise the option $250,000 is payable to the Vendors in cash or shares or a combination of cash and shares at the election of FAU. The share price to be used is based on the 30-day VWAP at the time. The Vendors and Ian Neilson Interests will be free carried to a decision to mine stage. First Au has the option to acquire the remaining 20% interest collectively held by the Vendors and the Neilson Interests at decision to mine at fair market value.
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