Heads of Agreement Executed for Blackwood Goldfield
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Cauldron Energy Ltd 28 November 2019 ABN 22 102 912 783 HEADS OF AGREEMENT EXECUTED FOR BLACKWOOD GOLDFIELD Address Ground Floor, Highlights 20 Kings Park Road WEST PERTH WA 6005 • Cauldron Energy execute a HOA to acquire a majority interest in the highly prospective Blackwood Goldfield located in PO BOX 1024 Central Victoria; West Leederville WA 6007 • Vendor has spent 25 years consolidating the leases of the ASX Code project area, now providing a great opportunity for systematic CXU exploration and development over the entire goldfield; Securities on Issue • Project provides pathway to the near-term production of gold; 329,289,708 shares • The largely forgotten Blackwood Goldfield produced significant high-grade gold from near surface historic mining; Board of Directors Simon Youds • +90% of historic gold production was won from the shallow Non-Executive Chairman portion of exceptionally high-grade gold in quartz reefs; • great potential remaining for large tonnage high grade gold, Jess Oram Executive Director & Chief down-plunge and along strike of workings; Executive Officer • Exceptional prospectivity along eight extensive lines-of-lode that are open and are proven past gold producers, notably; Qiu Derong Non-executive Director a) The Simmons to Sultan line-of-lode extends in excess of 4 km, historically the Simmons mine produced the Judy Li greatest mass of gold; Non-executive Director b) The Grace Edgerton Reef contains high grade gold Chenchong Zhou mineralisation with a defined Exploration Target that Non-executive Director remains open; Michael Fry c) The Yankee to Countess line-of-lode is marked by a Company Secretary high-density cluster of historic workings and only tested by shallow drilling; • Multiple high-priority targets identified with plans prepared for immediate drilling; • Existing underground infrastructure provides easy access to mineraisation and a ‘head-start’ on any possible production; • This project complements the Bullarto South Gold Project (refer ASX announcement of 8 November 2019) and • Cauldron has secured support, for a $450,000 private placement, subject to completion of successful due diligence. 20 Kings Park Road, West Perth WA 6005 | PO Box 1024 West Leederville WA 6901 | PHONE +61 8 6462 1421 | FAX +61 8 63233347 www.cauldronenergy.com.au Cauldron Energy Limited (Cauldron or the Company) (ASX Code: CXU) is pleased to announce that it has formally executed a Heads of Agreement (HOA) to acquire EL 5479 that secures much of historic Blackwood Goldfield. Pursuant to the terms of the HOA, (i) Cauldron is to acquire an initial 51% interest in the Blackwood Gold Project, centered over historic Sultan Mine, lying 40km east-northeast of Ballarat in the historic Victorian goldfields; (ii) Cauldron has the potential to increase its ownership interest to 65% by collecting sufficient geological data to report a Mineral Resource (JORC 2012) having a gold mass of at least 300,000 ounces; and (iii) Cauldron has the potential to increase its ownership interest to 80% by making a positive decision to mine. Cauldron continues to build a strong presence in the Victorian goldfields. The Blackwood and Bullarto South projects have significant historical exploration and mining activity supportive of the potential for large-scale gold deposits and short-term generation of cash-flow. Cauldron has identified at least three high-priority targets, allowing the possibility for: near-term cashflow from operations at Nuggety; resource extension along line-of-lode from Simmons Reef to Sultan Reef; and resource definition drilling on the line-of-lode between Yankee to Countess gold reefs. In addition, Cauldron is pleased to advise that it has secured support for a $450,000 private placement, that is subject to successful completion of due diligence, at a price of $0.015 per share (i.e. 1.5 cents per share) to fund initial exploration programs at its Victorian goldfields projects (Placement). In addition, participants in the Placement will receive a free attaching option on a 1 for 2 basis which is exercisable at $0.03 per share (that is, 3 cents per share) and which has an expiry of 31 December 2019 (Options). In total, it is proposed that 30,000,000 new shares and 15,000 Options are to be issued pursuant to the Placement; all of which are to be issued under are to be issued under the Company’s 15% placement capacity (under ASX Listing Rule 7.1). The new shares will rank equally with all existing fully paid ordinary shares on issue. The new shares and options will be issued when the entire funds have been received. BLACKWOOD AND BULLARTO GOLD PROJECT Summary The Bullarto South Gold Project and the Blackwood Gold Project (the subject of this announcement) together take up an area of 160 km2 and secure the most significant portion of the highly prospective Blackwood Goldfield. From 1864 to 1960 the Blackwood Goldfield produced about 218,000 ounces of gold from orogenic gold sources (199,000 ounces) and from placer sources (19,000 ounces); worth about $280 million at today’s gold price. Gold was won down to a depth of 100 m below surface, with very little mining activity below a depth of 150 m. The Sultan mine is the deepest in the goldfield with production levels at 230 m below ground surface and its shaft reaching 274 m, and still in pay. 2 The two projects complement each other and together provide: • a sizeable foothold in a largely forgotten but historically significant goldfield that has received only sporadic exploration since the 1920’s; • potential to fast-track mining production with near-term generation of cash flow; • potential for significant expansion of known mineral resource; • exceptional logistics being only 30 minutes easy drive from the outer suburbs of western Melbourne; • well-rounded exploration portfolio with an exploration pipeline of prospects. Cauldron has a high level of confidence in the Blackwood Gold Project, and the Bullarto Gold for the following reasons: • the advanced nature of the exploration and mining dataset showing the real possibility for near-term production and expansion of Mineral Resource; • existence of shallow remnant, high-grade gold mineralisation around historic underground workings abandoned due to flooding, in several areas of the licences; • existence of gold mineralisation deeper and down-plunge from known workings around the Sultan mine; • the vast historic dataset underpinned by historical exploration work conducted by skilled personnel; and • the experience of the geological team assembled by Cauldron and Vendor having deep understanding of the Victorian Goldfields. BLACKWOOD GOLD PROJECT Overview The Blackwood Gold Project comprises Exploration Licence (EL) 5479 covering an area of 24 km2 located in central Victoria,40 km east-northeast of Ballarat. The Exploration Licence is granted and is in Good Standing with a licence expiry date of 23 March 2024. The Project is centred on the Sultan Mine which historically produced a little over 73,000 ounces of gold at an average grade of 28 g/t. In addition, the project contains in excess of 250 underground workings; with the largest known producers shown in Table 1: Table 1: Gold production various reef sources in Blackwood Goldfield Mine Worked Ore Gold Produced Grade Depth [m] Mined [t] [oz] [g/t Au] North Sultana 243 620 Sultan 231 82,000 73,310 28 Sultana 61 1,530 Mounters 134 19,070 9,910 16 Homeward Bound 20 450 Bog Hill 62 3,180 Annie Laurie 76 270 Grace Edgerton 62 1,090 2,850 80 British Lion 1,100 Note: total reported production in this table is over 93,000 ounces for the larger producers; over 190,000 ounces for field 3 Most mining activity on reef structures in the goldfield halted at shallow depths. Cessation of mining in many cases was not due to depletion of mineralisation but to other factors such as inability to cope with high ground water flows in the underground workings or inability to raise the capital for development work. There are two important considerations for any drill-testing of targets in the Victorian Goldfields. The first consideration is defining drill targets having a very good understanding of structural geology and targeting the geometries that are significant. The second is to test lode structures at depths that are either above or below the geochemical depletion zone, a zone of reduced gold tenor. Attesting to the very high prospectivity in the acquired goldfield. Figure 1; Blackwood Gold Project – Location Map; Victorian structural zone with historic gold production (modified after GeoVic3); Blackwood and Bullarto South tenements shown in dark blue. Historical Exploration and Mining Activities The discovery of gold at Red Hill (near Blackwood) in 1855, led to a rush of prospectors to the goldfields. It is reported that at the peak of mining activity, there were about 13,000 miners along the Lerderberg River and its tributaries. Alluvial mining quickly gave way to underground hard-rock mining of gold-rich quartz reef structures. More than 90% of the gold produced from the Blackwood goldfields came from the hard rock source. The largely forgotten Blackwood Goldfield produced significant gold (220,000 ounces pre- 1890) from near surface historic mining, with great potential for large tonnage high grade gold, down-plunge and along strike of workings, most less than 100 m below surface 4 Figure 2; EL5479 Prospect location map and mines of Blackwood Goldfields; blue points show location of mine sites; dark blue denotes location of gold reefs; light blue denotes location of alluvial gold field; image from Google Earth. There is a cluster of mines along parallel but stepped reef structures around the Sultan Mine, including Central, Mounters, Intermediate, Pioneer, Homeward Bound, Western, Edgerton, and Annie Laurie, refer Figure 2, 3 and 4. Often each of these lodes were owned and operated by different companies.