HIPO Resources Limited has entered into an exclusive, binding option agreement which can earn the company an initial 30 per cent interest (moving to 50 per cent then 70 per cent) in Zamia Resources Pty Ltd, a wholly-owned subsidiary of Zamia Metals Limited which owns four exploration licences in the Central Queensland goldfields.
The licences cover ~115km2 and house two open pit historical gold mines, the Belyando and Lucky Break Mines as well as multiple unexplored targets. The project is strategically located within the Drummond Basin that has >6.5moz gold endowment and a long history of ongoing mining.
Hipo has executed a binding heads of agreement (HoA) with Zamia, granting the company an exclusive period in which to complete due diligence.
Hipo has the ability to earn an initial 30 per cent in Zamia Resources upon meeting a minimum project spend of $500,000 within the first six months (which includes an initial $75,000 cash payment at settlement), with an additional spend of $1m million to move to 50 per cent.
Zamia will also be issued 40,000,000 ordinary shares subject to a 12-month voluntary escrow.
Hipo is entitled to a further 20 per cent of Zamia Resources (70 per cent in total) on terms to be agreed regarding further expenditure on the project in respect of an agreed work program and budget.
Based on information published in the Zamia Gold Mines Limited prospectus dated 3 November 2006, the Belyando and Lucky Break Mines together produced ~93,000 oz Au from shallow open cut operations in the late 1980s and early 1990s with mining ceasing due to low commodity prices at that time.
The projects have excellent geology and are under-explored. Zamia’s experienced technical team, which has an intimate knowledge of the project, believe there is the potential to rapidly delineate a new Mineral Resource Estimate through an active exploration program expected to commence shortly after the transaction is completed. The works program will include updating all historical data.
Hipo Executive Chairman Maurice Feilich said the company is confident it can deliver significant value to shareholders through a multi-faceted exploration program in and around the dormant open pit mines and the potential mineralisation extensions along strike and at depth.
“Of equal appeal are the very compelling high-value targets that Zamia’s experienced team have defined across the ~115km2 of exploration licences; they hold outstanding exploration potential.”
“We look forward to concluding the transaction and getting on with exploration which Zamia’s team are now planning.”