ATW Venture Buys Gold Mine Down Under

Vancouver — ATW Venture (ATW-V) has cut a deal to buy a gold mining operation and surrounding land package in a historic gold belt in Western Australia.

ATW is buying the Burnakura gold mine — first run as a shallow, open-pit operation in the 1990s — from Tectonic Resources (TTOSF-O, TTR-A) and Extract Resources (EXT-A) for A$4 million and 5 million shares plus warrants (exercisable for three years at 79 apiece).

Located in the Archean greenstone terrain of the West Yilgarn goldfields, Burnakura provided near-surface oxide mineralization to provide feed for a nearby operation. The Aussie partners developed underground operations in 2005 — sinking a decline beneath one of the previous open cuts. They began milling ore in late 2005, producing about 30,000 oz. gold before production stopped early this year, when both partners changed focus — Tectonic to base metals and Extract to uranium.

The duo calculated a revised, JORC-compliant resource estimate for the NOA2 deposit at Burnakura earlier this year, after operations were shut down. The estimate pegged the measured and indicated resource at 261,000 tonnes averaging 7.8 grams gold per tonne plus 143,000 inferred tonnes at 5.4 grams gold for a total of about 90,000 contained ounces.

Tectonic and Extract also established a global resource tally of 907,000 measured and indicated tonnes averaging 5.2 grams gold plus 2.9 million inferred tonnes of 2.6 grams gold on its 58.8-sq.-km land package, a total of about 391,000 contained ounces gold.

Most of the reported resources are generally shallow, less than 100 metres below surface; the property has seen very little deep drilling.

ATW Venture says that although controls on mineralization have not been well understood, underground operations have shed light on an east-west structural component thought to be important in hydrothermal activity and gold emplacement.

The junior has enlisted PI Financial and Haywood Securities for a planned $8.4-million financing to float the deal and provide working capital.

The company intends to sell 14 million subscription receipts at 60 apiece that can be exchanged for units comprising a share and half a warrant. Warrants will be exercisable for two years from release of escrowed funds at an anticipated price of 80.

The agents will reap a 7% commission of gross proceeds (about $588,000) plus additional compensation options equal to 8% of the subscription receipts sold (about 1.12 million options) that can be exercised to buy shares at 65 apiece over two years.

The Burnakura acquisition includes a 440-tonne-per-day capacity carbon-in-leach (CIL) plant plus infrastructure including offices, workshops and a 90-person camp.

Following some modest refurbishment of the Burnakura plant, ATW is targeting annual production of about 42,000 oz. gold by the third quarter of 2008.

Shares of ATW, which had been halted at 63 prior to the announcement, gained 12 to 75 apiece on the news. The stock has a 52-week trading range of 40-$1.46.