In a move with significant ramifications, Chalice Gold Mines (ASX:CHN) has exercised an option to purchase the remaining 20% interest of the Zara Gold Project in Eritrea (including the Koka Gold deposit) from Dragon Mining Limited (ASX:DRA).
Chalice’s ownership in the Zara Gold Project will move to 100%.
A feasibility study is near completion on the project and is due by July 2010. Recently, Chalice inked a maiden ore Reserve of 760,000 ounces for the Koka Gold deposit, part of the Zara Project in East Africa.
As consideration for acquisition, Chalice will today pay the balance of $7.75 million, for a total of $8 million, to Dragon and will issue Dragon with 2 million Chalice vendor shares subject to satisfaction of normal conditions outlined in the Sale and Purchase Agreement.
A deposit of $250,000 had previously been paid on grant of the option. A further $4 million will be paid to Dragon on delineation of a 1 million ounce gold Ore Reserve at the Zara Project.
Zara is a high grade deposit, 840,000 oz @ 5.3 g/t, with significant unexplored ground position and hence upside in resource inventory and with targeted first production in 2011.
