Fosterville South Exploration is set to acquire a 100% stake in three high-grade gold projects after entering into a purchase agreement with Mercator Gold Australia, a subsidiary of ECR Minerals, in a deal worth up to AUD2.5m ($1.57m). Under the terms of the agreement, Mercator will receive a cash consideration of AUD500,000 ($313,665), and will receive AUD1 for every ounce of gold or gold equivalent of measured resource, indicated resource or inferred resource within the tenements, up to a maximum of AUD1m.
If Fosterville South carries out commercial production at the projects, Mercator will receive AUD1 for every ounce of gold or gold equivalent ounces produced, up to a maximum of AUD1m.
Fosterville South will take ownership of the Timor Project, the Avoca Project and the Moormbool Project. All three are in the Lachlan Fold Belt within Central Victoria, Australia.
Understanding the acquisition
Fosterville South has acquired three gold-focused tenements, increasing the company’s land package by 271km2. The Avoca and Timor sites have seen historical mining of 1,390,000 ounces of gold, and all three sites have considerable exploration upside with numerous drill-ready prospects, based on earlier work.
The Moormbool project area is a largely-unexplored region that has nonetheless shown potential signs of gold, and other sites around the project area have been successfully mined. The Moormbool licence compliments the Moormbool East Exploration Licence application held by Fosterville South’s subsidiary Currawong Resources. That licence is immediately east of the newly-acquired Moormbool project.
The Avoca project is located approximately 183km from Victoria state capital Melbourne, with good road access. Having previously been mined with a significant amount of gold production from both alluvial and hard rock high-grade sources, Fosterville South believes the site is highly prospective for hard rock structurally-controlled gold deposits.
The Timor project is immediately east of the Avoca project and has seen significant historical gold production. Around 20 hard rock workings can be considered to have been significant producers. These include the Leviathan group of mines, with recorded gold production of 56,474 ounces of gold from 189,085 tonnes, equating to a recovered grade of approximately 9.14 g/t gold.
Executives respond to the deal
Commenting on the acquisition, ECR Minerals CEO Craig Brown said: “We are delighted to sell these non-core but high-potential licences to Fosterville South while maintaining exposure to upside from the Licences as a result of future resource estimation or production.
“We believe Fosterville South is well placed to advance the Licences with its strong local exploration team and backing from North American high-net-worth and institutional investors, while ECR will continue to concentrate its resources on our core projects in Victoria, Bailieston and Creswick.
“The initial cash to be received from this disposal… puts ECR in a robust working capital position which we can apply toward development of our core projects.”
Fosterville South company overview
Fosterville South Exploration operates around the Fosterville gold mine, owned by Kirkland Lake Gold. The Fosterville mine is the world’s highest grade and lowest cost gold mine. Fosterville South operates the Lauriston, Golden Mountain, and Providence Gold projects, all adjacent or close to Kirkland Lake’s site. An area of extensive historical mining, Fosterville South Exploration works to further explore the region and uses modern mining methods to reach previously unknown or unreachable gold deposits.
On 14 April, Fosterville South Exploration listed on the Canadian TSX Venture Exchange, and the company has a market cap of AUD18m ($11.28m).