In December 2019 we announced the initiation of a high-grade gold strategy by signing a Heads of Agreement to acquire Awati Resources Limited as a wholly owned subsidiary, which owns the highly prospective Tibooburra Gold Project.
About Awati and the Tibooburra Gold Project
Awati was established with the principal objective of exploring for and discovering high-value mineral deposits, resulting in an early focus on high-grade gold systems located near Tibooburra in north-western New South Wales.
The 1,020km2 Tibooburra Gold Project comprises a contiguous land package of 10 granted exploration licences located approximately 200km north of Broken Hill. It stretches 160km south from the historic Tibooburra Goldfields, along the gold-anomalous (soil, rock and drilling geochemistry, gold workings) New Bendigo Fault, to where it merges with the Koonenberry Fault, and then strikes further south on towards the recently discovered Kayrunnera gold nugget field. The area is conveniently accessed via the Silver City Highway, which runs N-S through the project area.
Auriferous quartz vein networks and alluvial deposits that shed from them, were mined in shallow pits, shafts and adits by early prospectors between 1881 and 1901. Over 1,700kg of gold was extracted, mostly from alluvial and eluvial deposits. Despite the rich rock-chip gold assays and overall historical mining grades of over 20g/t Au, the primary ore systems have rarely been tested below the water table (approx. 60m). Only sporadic exploration has been conducted since the abandonment of the goldfield in 1901, with undercover exploration utilising the high-quality geophysical datasets of the Geological Survey of NSW (”GSNSW”) now being possible.
Similarities to the Victorian Goldfields
After a detailed study of the Tibooburra District, GSNSW geoscientists (Greenfield and Reid, 2006) concluded that ‘mineralisation styles and structural development in the Tibooburra Goldfields are very similar to the Victorian Goldfields in the Western Lachlan Orogen’. In their detailed assessment and comparison, they highlighted similarities in the style of mineralisation, mineral associations, metal associations, hydrothermal alteration, structural setting, timing of metamorphism and the age of mineralisation, association with I-type
magmatism, and the character of the sedimentary host rocks. Mineralisation in the Tibooburra Goldfields is classified as orogenic gold and is typical of turbidite-hosted/slate-belt gold provinces (Greenfield and Reid, 2006).
Awati Exploration – Northern Licences
Awati concluded that given the widespread hydrothermal alteration and ubiquitous gold anomalism (soils and drainage geochemistry) along the New Bendigo Fault, the area held considerable potential to host multimillion-ounce orogenic gold deposits similar to those found in Victoria (e.g. Fosterville).
The New Bendigo fault system extends for more than 30km within the Northern Licences and includes part of the Tibooburra Goldfield. However, only approximately 20% is exposed as either outcrop or areas of residual soil that are amenable to surface sampling. All historical workings can be found in these ‘windows’, with the bulk of this highly prospective structure masked by relatively thin (<50m) transported cover. A number of high priority targets (New Bendigo, The Kink, Milparinka) have been identified for initial drill testing using fences of wide-spaced RAB holes (Figure 3).
New Bendigo Prospect – an advanced, Northern Licences prospect
On-ground exploration (mapping, soil geochemistry, drainage geochemistry, drilling) of the New Bendigo Prospect, which is located in the Northern Licences, returned highly encouraging gold intersections, including those listed below. These drill results have been interpreted to define a north-plunging, high-grade gold shoot, which is open down-plunge to the north. Significantly, all the drill intersections listed below grade in excess of 15 gram.metres (gold grade in g/t multiplied by thickness in metres).
Thicknesses shown below are the drill hole intercepts (apparent widths) and true widths are approximately 30% less.
- 26m @ 4.55 g/t Au from 8m (TIBRB-12, RAB)
- 8m @ 7.10 g/t Au from 12m (TIBRB-235, RAB)
- 4m @ 11.33 g/t Au from 36m (TIBRB-15, RAB)
- 6m @ 2.58 g/t Au from 76m (AW18RC-003, RC)
- 3m @ 10.93 g/t Au from 102m (AW18RC-004, RC)
- 14m @ 2.14 g/t Au from 103m (AW18RC-007, RC)
- 5m @ 7.70 g/t Au from 53m (AWNB-05, Diamond).
A more aggressive approach to the Awati drilling was warranted at the time given these favourable early drill results. However, the project was privately financed, and funds were limited.
Awati Exploration – Southern Licences
To the south in the Southern Licences, the New Bendigo Fault continues for another 70km to where it converges with another major structure – the Koonenberry Fault. This convergence creates a 50km-long zone of even greater structural complexity, which further enhances the potential for the discovery of large, multi-million-ounce gold systems concealed beneath the relatively thin (<50m) transported cover.
Four priority targets (Cobham Ridge, Fault Splay, North Gap, and Mongrel – Figure 5) have been identified that have two or more of the following characteristics:
- Located on a structural kink, splay or bifurcation
- Coincidence with anomalous (10 times background) gold soil geochemistry
- Proximity to Kayrunnera Nugget Field
- Coincidence with zones of interpreted magnetite destruction (i.e. favourable alteration).
Proposed 2020 Work Programme
Northern Licences – Drilling at the New Bendigo Prospect and Other Priority Targets
MHC plans to commence drilling in early 2020 at the New Bendigo Prospect to follow the north-plunging, highgrade gold shoot deeper into the system, and to test for thicker mineralised intervals developed on interpreted interconnecting cross-structures. MHC also plans to test at least two (2) other priority targets, initially with fences of RAB holes to define zones of gold anomalism ahead of deeper RC drilling.
Southern Licences – Priority Target Areas
MHC plans to test at least three priority targets within the Southern Licences in 2020, initially with fences of RAB holes to define zones of gold anomalism ahead of deeper RC drilling.
Terms of the Acquisition
MHC, Awati and the shareholders of Awati have executed a Heads of Agreement pursuant to which MHC will, subject to satisfaction of certain conditions precedent, acquire 100% of the shares in Awati. In consideration for the acquisition of Awati, MHC will issue to the Awati shareholders an aggregate of:
- 200,000,000 fully paid ordinary shares in MHC (Consideration Shares) at a deemed issue price of $0.005 each. The Consideration Shares will be subject to voluntary escrow for a period of 12 months from the date of their issue;
- 50,000,000 options to acquire fully paid ordinary shares in MHC (Consideration Options), each Consideration Option having an exercise price of $0.01 and an expiry date of 1 August 2023. The Consideration Options are on the same terms as MHC’s listed options; and
- 300,000,000 performance shares in MHC (Consideration Performance Shares) convertible into MHC Shares on the announcement of a JORC compliant resource of at least 500,000 ounces of gold at the Tibooburra Project at 0.5g/t cut off. The full terms of the Consideration Performance Shares are set out in Annexure 2.
Completion is conditional upon the satisfaction (or waiver) of conditions precedent by the later of 3 months after the 29th of November and 31 March 2020. The material conditions precedent are:
- MHC completing its financial and legal due diligence review of Awati and the Tibooburra Gold Project by 21 days after the 29th of November and MHC, in its sole discretion, being satisfied with the results of that due diligence;
- MHC obtaining all necessary shareholder approvals;
- Awati obtaining all necessary shareholder approvals;
- MHC raising $500,000, or such higher amount as determined by MHC, at a price per MHC Share of at least $0.005;
The full list of conditions precedent are set out in Annexure 4.
As noted above, MHC will undertake a minimum Placement of 100,000,000 shares at $0.005 per Share (Placement) to raise a total of $500,000 (before costs) to sophisticated and professional investors.
Competent Person’s Statement, Tibooburra Gold Project
Figure 1: Location of the Tibooburra Gold Project
Figure 2: Prospective Palaeozoic gold terrains (green shading) of NSW and Victoria
Figure 3: Northern Licences, showing the New Bendigo Prospect and other high-priority gold targets. Total Magnetic Intensity
(TMI) base image
Figure 4: New Bendigo Long Section showing the north plunging shoot and the potential for a sub-parallel shoot. Section line is oblique to the GDA-94 grid and runs from 587650E 6719100N to 587450E to 6719450N
Figure 5: Southern Licences, showing Priority Targets on Total Magnetic Intensity (TMI) base image