D'Aguilar Gold Limited (ASX:DGR) Quarterly Report For The Period Ended 31 December 2009
During the quarter, field exploration activities were concentrated on soil sampling and geological mapping on Central Minerals projects, and D'Aguilar Gold wholly owned projects at Bathurst and Cressbrook Creek. Late in the quarter a diamond core hole was drilled on the Peenam prospect south east of Goomeri.
As announced to the ASX on 4 December 2009 D'Aguilar Gold has agreed to sell Central Minerals to Solomon Gold Plc in exchange for shares in Solomon and repayment of 2 million in previous exploration expenditure as cash and convertible notes in Solomon Gold. Subject to shareholder approval, D'Aguilar will become a substantial shareholder in a significant integrated south west Pacific gold exploration and development company.
The company's plan to merge its owned nickel/cobalt subsidiary AusNiCo Limited with the Canadian listed Lions Gate Metals Inc is proceeding smoothly with both entities satisfactorily completing due diligence.
However satisfying Canadian regulatory requirements has resulted in the project timetable slipping out by almost 3 months. Finalisation is now expected in the current quarter.
Gold- Central Minerals Pty Ltd
As announced to the ASX on 4 December, D'Aguilar Gold has entered an agreement for the sale of its 79% interest in Central Minerals which holds gold exploration tenements in Central Qld at Rannes and Clermont.
The agreement provides for the acquisition of 100% of Central by Solomon Gold plc (AIM listed, London Stock Exchange) in consideration of the issue of 37.2m shares in Solomon Gold and pro-rata allotment to the shareholders of Central. In addition D'Aguilar will receive A$1m cash on completion of the acquisition and A$1m in convertible notes from Solomon to acquire its A$2,281,000 loan to Central. The notes mature 12 months from the date of issue, bear a 10% coupon and are convertible at market price (minimum 8p) for Solomon Gold shares at the time of conversion. D'Aguilar will receive 29.388m shares and with the 3,555,557 it already holds, will hold a total of 32,943,557 shares or 17.05% of Solomon Gold plc.
Solomon Gold's board comprises five members including D'Aguilar CEO Nick Mather and non executive Brian Moller, and three non executive directors - Messrs Cameron Wenck (Chairman), John Bovard, and Dr Robert Weinberg. Mr Wenck has 25 years commercial experience in professional insurance and investment businesses and Mr Bovard and Dr Weinberg have had considerable experience in the gold investment and mining industries. Dr Weinberg is a geologist with 36 years experience in mining finance and marketing and has been a consultant to and Director of several junior exploration companies, including currently Medusa Mining. He was previously CEO of the world gold council and served at James Capel. Mr Bovard a civil engineer has approximately 35 years experience in the operational aspects of the mining industry having headed the construction of Porgera (PNG) and Bronzewing Gold Mines (WA) and served as the general manager of OK Tedi Mining Limited.
Messrs Mather and Moller are both Directors of Solomon Gold, D'Aguilar and Central, and abstained from the resolutions by Solomon Gold and D'Aguilar in respect of the agreement. As a result of the acquisition of Central, Mr Mather and associated interests will become entitled to a further 558,000 shares in Solomon Gold.
The agreement is subject to shareholder approval by the shareholders of D'Aguilar in a general meeting to be held on 19 February 2010. The sale of D'Aguilar's interest in Central is recommended by the independent non-conflicted directors of D'Aguilar subject to there being no higher bid capable of acceptance received by D'Aguilar. D'Aguilar has agreed to pay a cash break fee amounting to 1% of the total value of the proposed consideration in the event that the sale is not approved. Solomon Gold also has a right to match any higher offer received.
Completion of the Central sale will see D'Aguilar become a significant shareholder in an integrated diversified south west Pacific gold explorer with world class targets in Joint Venture with Newmont Ventures on Guadalcanal, Solomon Islands and wholly owned gold exploration projects at Fauro Island near Bougainville, Carlin style targets at Rannes, central Queensland, 120km north of Cracow (Newcrest operation) and high grade veins porphyry and intrusion related gold projects on the Mt Perry Goldfield adjacent to the Mt Rawdon gold mine (Lihir Gold) in south east Queensland. Additional information may be seen at the website for Solomon Gold, http://www.solomongold.com
Over the past three years D'Aguilar has identified gold and silver mineralisation in central Queensland occurring in relatively flat lying nearsurface sediment and shear hosted zones where mineralising fluids flowing from deeper intrusives have encountered limey sediments. These low temperature, medium sulphide content, sediment hosted deposits are in contrast to the near vertical vein hosted low sulphidation deposits in older rocks that are evident at the Newcrest operated Cracow gold mine, and bear striking similarities to the "Carlin Style" of mineralisation of Nevada, USA, home of some of the world's largest open cut gold mines.
During this quarter D'Aguilar's exploration team commenced research to identify replications of this style of mineralisation. This investigation identified the eastern edge of the northern Bowen Basin, west of Mackay, as having striking similarities. The area stretches north north west from Clermont to just south west of Collinsville. Apart from a significant current and historic coverage with Exploration Permits for Coal there was little evidence of previous exploration for minerals.
A key to recognising the potential of the north Bowen Basin was the availability of recent new Queensland Government airborne geophysical surveys over much of the area. D'Aguilar's exploration team reviewed the magnetic data and identified several major NNW structures intersected by WNW reverse or thrust faults, with numerous Cretaceous aged porphyry style intrusions through the Bowen Basin evident along the major structures. A number of prospects are evident with close similarities to the Crunchie Prospect in Central Minerals, which already has strong Carlin style credentials and long intersections of potential ore grades for gold previously announced.
In the north of the area of interest around Byerwen there are large unclosed high level gold soil anomalies (up to 55 ppb gold) recorded, and recorded alluvial gold at Plum Tree Creek and the Weetalaba Deep Lead. A single scout hole in silicified sediments on the anomalous western area by AMC-Posgold in 1993 assaying 2 metres at 9 g/t gold from surface does not appear to have been followed up (former EPM 9209). Further to the south east, in an area now within the Hail Creek coal mining lease, exploration by Jabalaka Pty Ltd in 1990 reported the presence of outcropping jasperoid breccia assaying up to 17.2 g/t gold at surface (former EPMs 5418 and 5916).
D'Aguilar's subsidiary Navaho Gold Pty Ltd (formerly Navaho Mining) has now secured exploration licence applications over an extensive new "Carlin Style" gold province in Queensland on the eastern edge of the northern section of Queensland's Bowen Basin, lodging a total of 14 applications for Exploration Permit for Minerals (EPM) along almost 200 kms of strike, and covering some 3,800 sq kms between Clermont and Collinsville.
D'Aguilar Gold has commenced the search for a CEO for Navaho Gold, and a capital raising within Navaho ahead of an IPO and listing on a recognised stock exchange.
AusNiCo - New Nickel and Cobalt
AusNiCo is D'Aguilar's owned nickel exploration subsidiary, focussed on defining nickel sulphide and oxide mineralisation in extensive new provinces in Queensland. In 2008, the company discovered the first significant nickel sulphide mineralisation in Qld at Pembroke near Kilkivan in Hole PEM 2 (8 metres @ 0.73% nickel within a 50 metres zone averaging 0.34% Ni near surface). A large zone of oxide nickel mineralisation is under assessment at Mt Cobalt in the same area. The prospect has been drilled by AusNiCo and a substantial oxide target in a hydrothermally altered serpentinite host has been outlined. D'Aguilar has identified potential for a deeper sulphide target coincident with a large magnetic anomaly.
As previously announced, in September 2009 agreement was reached to merge AusNiCo with the TSX listed tier 1 Canadian company, Lions Gate Metals Inc. (TSX-V Code: LGM). The merger of the two companies will create a listed base metals specialist with nickel, cobalt, copper and molybdenum assets in British Columbia, Western Canada and south east Queensland, Australia. Due diligence by all parties has been completed, and on 18 December 2009 a binding Letter of Intent (LOI) was executed with Lions Gate. The LOI contains the principal terms of the business combination transaction disclosed in the Company's ASX release of 3 September 2009.
Pursuant to the transaction and subject to satisfaction of certain conditions, Lions Gate will acquire from the AusNiCo shareholders all of the issued and outstanding shares and options of AusNiCo in exchange for the issuance of an aggregate of 10,000,000 common shares of the Company to the AusNiCo shareholders and 3,000,000 warrants to the AusNiCo option holders.
Each warrant will entitle the holder to purchase one common share of Lions Gate for CDN$1.10 at any time within five years of the date of issuance.
At the closing of the transaction, AusNiCo will become a wholly owned subsidiary of Lions Gate and the shareholders of AusNiCo will become shareholders of Lions Gate. The Lions Gate shares and warrants to be issued to the AusNiCo shareholders under the transaction, and any shares to be issued upon the exercise of the warrants, will be subject to any restrictions on resale, including escrow restrictions, imposed by applicable laws and the TSX Venture Exchange ("TSX") At finalisation, based on Lions Gate's current issued shares and assuming completion of the C$3.5million private placement and the payment of the finder's fee noted below, Lions Gate is expected to have approximately 24.5 million issued and outstanding shares, approximately 34% of which will be held by DGR and approximately 8% of which will be held by the other former AusNiCo shareholders.
On the completion of the transaction, the board of directors of Lions Gate will be composed of five directors. Three of the directors will be nominated by Lions Gate and two of the directors will be nominated by AusNiCo. Lions Gate will nominate John Icke, Arni Johannson and Mark Hewett, who are current directors of Lions Gate, and AusNiCo will nominate Nick Mather and Brian Moller, who are current directors of AusNiCo.
Following the closing, DGR will have the right to nominate a third director for election at the 2010 annual general meeting of Lions Gate, which must be held within six months following the closing or earlier if requested by DGR.
The closing of the transaction is expected to occur in February 2010, following submission of the filing statement and final acceptance from the TSXV of the transaction, or such other date as the parties may agree.
The principal Lions Gate project is the Poplar copper gold porphyry approximately 150km south of Smithers, British Columbia in an area of substantial infrastructure only 40km from the producing Huckleberry Mine. Poplar is a significant copper gold porphyry system, and additional porphyry targets in the region have been defined by a recent airborne 160km2 EM and detailed magnetics survey. The Pimpernel, Aspen and Red Pine targets have been defined with similar signatures to major porphyry copper gold projects in British Columbia. In addition to these targets, an IP survey has defined a significant IP anomaly underneath the Poplar deposit on its east side. In the context of increasing copper grades and potassic alteration in existing drill holes in the Poplar deposit, the IP anomaly is interpreted to represent a higher grade extension to the existing Poplar deposit.
The Kelly Creek project, 30 km west of Terrace, British Columbia is a red-bed copper project similar in style to Calumet Mine in Michigan USA. There is considerable potential to define additional drilling targets, and a program of airborne geophysics and subsequent drilling has been planned to test the new targets at the Upper Kelly Creek and East Side prospects.
Lions Gate also holds the Hudson Bay molybdenum project near Smithers located around the Davidson molybdenum project owned by Thompson Bay Mining Inc.
Recently, Lions Gate entered an agreement to acquire a 75% interest in the ROK Coyote project adjacent to the Red Chris deposit being developed by Imperial Metals Inc in northern BC. Recent drilling at Red Chris has outlined a significant zone of high grade copper and gold mineralisation underneath the existing deposit. That feature and the relatively unexplored nature of the 9 km2 intrusive system at ROK, similar geology to Red Chris, untested IP anomalies and existing drill results up to 48m @ 1.4% copper and 1.4g/t gold highlight the prospectivity of the area.
The Boards of both Lions Gate and D'Aguilar consider the global base metals exploration and acquisition strategy to be well founded and believe that strong growth in the rapidly industrialising nations of China and India will underpin strong markets in construction and industrial base metals particularly copper, molybdenum and nickel. D'Aguilar Gold currently intends to hold its position in Lions Gate Metals as a base for a global base metals company.
Porphyry Copper & Gold - Barlyne Mining Pty Ltd As reported recently, D'Aguilar Gold has formed a new subsidiary Barlyne Mining Pty Ltd to specifically focus on the identification and development of large porphyry copper gold systems in Qld. This followed the drilling of a diamond core hole on the Peenam Prospect near Goomeri in December which produced a lengthy sub economic intersection of copper and gold. Interpretation on detailed magnetic imagery suggests the hole was drilled on the edge of a large porphyry copper gold system.
Finely disseminated pyrite and minor chalcopyrite was noted from the base of oxidation at 18 metres until the end of the hole at 287.8 metres. The main copper gold mineralisation was within a quartz - chalcopyrite - magnetite vein phase that overprinted the pyritic disseminations over the entire length of the hole.
The widespread potassic and chloritic alteration, visible copper minerals and associated vuggy anhydrite fractures, indicated that the hole was drilled within a large poorly exposed porphyry copper gold system.
The high pyrite to chalcopyrite ratio, the lack of intrusive rocks, and the distribution of more volatile and distal peripheral element assemblages (arsenic antimony lead and zinc) suggest that the Hole PEED1 was drilled into the edge of a porphyry system, in an outer alteration zone which would not be expected to host ore grade copper gold mineralisation.
D'Aguilar is in the process of transferring the Peenam and Gayndah exploration permits in to Barlyne Mining Pty Ltd, and Barlyne has applied for a larger exploration tenement surrounding the Peenam EPM. The Oaky Creek prospect near Gayndah is an outstanding porphyry copper gold prospect, situated within the centre of a well preserved Triassic volcano, and as previously announced the first diamond core hole into a large diatreme (breccia pipe) revealed continual mineralisation from surface to the end of hole (500 m). The mineralisation was intensely clay altered and silicified volcanic rocks with strong zinc and lead anomalism. This is typical of that encountered above a porphyry copper system which has yet to be tested by a deep diamond drill hole.
D'Aguilar geoscientists seconded to Barlyne Mining have identified other prospective targets based on a comprehensive geological, geophysical and geochemical database assembled by the company over the past five years, and further applications for exploration permits at Colo and Yorkeys/ Calgoa have been lodged with the Queensland Mines Department.
During the quarter the company undertook further sampling and received the results of the earlier sampling program at D'Aguilar's Bathurst Gold/Copper Project. A detailed follow up review has led to the company applying for a new Exploration Licence (EL) surrounding the east, north and northwest of the existing licence area to test for the possible extension of identified gold mineralisation under cover.
D'Aguilar's Cressbrook Creek Prospect was surrendered late in the quarter after a detailed review of its prospectivity suggested that while grade potential was certainly quite evident, the potential for the discovery of significant tonnages of economic mineralisation was not strongly supported by the apparent geology.
Further exploration of Ridge Exploration iron, rutile and titanium prospects has been held back by delays in securing grant of new tenements due to lengthy native title access negotiations. Discussions are expected to resume following the end of the holiday period.
D'Aguilar is also currently reassessing commercial options for its Anduramba Molybdenum project.
D'Aguilar's strategy of seeking listing of its key assets on recognised stock exchanges is designed to deliver - negotiability for its key assets; less dilutive funding of forward exploration programs; and expanded and focussed project management teams independent of D'Aguilar.
D'Aguilar's current aim is to hold its key positions in the listed companies. Currently D'Aguilar holds 2.3% of AIM listed Solomon Gold plc (AIM:SOLG) and a substantial position (48%) in the ASX listed Mt Isa Metals Ltd (ASX:MET), with a current focus on gold and base metals exploration in the Mt Isa-Cloncurry area of northern Queensland. D'Aguilar will work to complete the Lions Gate -AusNiCo merger and the sale of Central Minerals Pty Ltd for Solomon Gold shares as soon as possible, and effect a listing of the share capital of Navaho Gold Pty Ltd, Barlyne Mining Pty Ltd, Anduramba Molybdenum Pty Ltd and Ridge Exploration Pty Ltd as soon as practical.
The Board looks forward to updating shareholders on these developments in due course.
For the complete D'Aguilar Gold Quarterly Report for the period ended 31 December 2009, please click the link below:
About DGR Global Limited
DGR Global (formerly D’Aguilar Gold Limited) (ASX:DGR) is focused on generating exploration and development companies in a wide array of minerals.
Projects are conceived directly through the skills and experience of D’Aguilar’s accomplished team of exploration geoscientists (with an enviable track record), not by the costly purchase of properties. Each project or exploration strategy is held in a separate subsidiary.
Focused and specialist management is then engaged in the subsidiary, with project specific finance raised in the subsidiary – faster and less dilutive to D’Aguilar. As the subsidiary project develops and starts to derisk the subsidiary is separately capitalised (seed raisings followed by an IPO).
Investors can choose to invest specifically in a particular project/commodity, or by investing in D’Aguilar, invest in the resource company generating business which retains a significant carried interest in each project.
D’Aguilar projects tend to be very large, targeting new provinces with the potential to make world-class discoveries. The exploration concepts are often novel. While increased metal prices and advances in technology can turn former sub-economic deposits into viable projects, D’Aguilar subsidiary projects frequently emerge from detailed reassessment and reinterpretation of large databases – looking at things from a new angle and with a different focus using state of the art techniques. The D’Aguilar Directors and Managers have in the past applied new exploration models to extensive tenement areas which have led to identification of new mineral provinces and the discovery of nationally significant resources. Similar efforts are now being dedicated to D’Aguilar.
Solomon Gold Plc
Newmont Mining Corp
Newcrest Mining Limited
Mt Isa Metals Limited
Lions Gate Metals Inc.
Lihir Gold Limited
DGR Global Limited