Brisbane, April 6, 2009 AEST (ABN Newswire) - North Queensland Metals Limited (ASX:NQM) announces that it has entered into an option agreement to purchase the Dotswood Gold Project (formerly known as Far Fanning), located 60km southwest of Townsville.
The project has a history of gold production, previous owners having extracted oxide ore and some higher grade underground ore in 1986-1987 and 2000-2004 respectively.
This is an advanced project and NQM plans to undertake confirmatory drilling, including angle drilling, in the 6 month option period with the expectation of estimating a Resource on this project. A Scoping Study will then be undertaken in order to decide whether to proceed with the purchase of the project.
Subject to a subsequent Feasibility Study, commencement of mining is targeted for late 2010.
Announcing the agreement, NQM's Chief Executive Officer, Mr John McKinstry, said:
"Dotswood provides NQM with the opportunity to develop a second gold mine to add to production from our currently operating Pajingo mine (NQM 60%)."
"If the confirmation drilling to be undertaken during the option period yields what we expect, then the purchase of Dotswood will take NQM a step closer to realising our goal of becoming a mid tier gold producer."
NQM will pay A$220,000 to the vendor during the six month option period, and, if satisfied with the outcome of exploration, will purchase 100% of the project for an additional:
- A$1,900,000 in cash
- 1 million NQM shares and
- a 1% royalty for the life of the mine.
The Dotswood project offers for NQM the following features:
- A history of gold production
- Current mining leases, with minimal environmental liabilities
- Geographically well located with good access to both Townsville and Charters Towers
- Potential to quickly establish resources with likely depth and strike extensions;
- Potential for relatively low cost open pit operation
- Free milling ore with high recoveries
- Relatively quick to develop
- Exploration potential beyond main structure
- Affordable buy-in cost.
Pajingo Update
During the month of March, operations at NQM's 60% owned and managed Pajingo mine recovered to normal levels of activity. As previously advised, gold production for the March 2009 quarter was adversely affected by the abnormally severe wet season conditions and will be down on the record production of 16,287 oz gold achieved in the previous December 2008 quarter.
"It has been gratifying to see how the management at site dealt with the factors affecting production and made a good recovery in March," Mr McKinstry said.
"We are now focused on maintaining the budgeted levels of production to which we have returned during the final quarter of the 2008/09 year."
Contact
John D McKinstry
Chief Executive Officer
North Queensland Metals Limited
Tel: +61-1300-308-832
Fax: +61-7-3666-0510
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