Vancouver-listed Princess Resources will pay US$70 million for all the shares of Consolidated Mines of Kazakhstan, which holds a 22.5% indirect interest in the Vasilkovskoye gold property in northern Kazakhstan.
Consolidated Mines holds a 45% interest in Placer Kazakhstan (PK), a 55%-owned subsidiary of Placer Dome (TSE).
This past April, PK agreed to acquire a half interest in the Vasilkovskoye project from the Kazakh government for US$80 million. To date, US$35 million has been placed in escrow, and the remaining portion will be released as soon as PK and the government have negotiated a formal joint-venture agreement.
Discovered in the 1960s, Vasilkovskoye has been probed with 1,680 drill holes and more than 25 km of underground workings. However, development of the 280-sq.-km project has been delayed as a result of insufficient capital.
Geological resources total 138 million tonnes averaging 3.03 grams gold per tonne at a cutoff grade of 1.5 grams gold. Should the deposit be placed in production, open-pit mining and carbon-in-leach recovery would be employed.
The project is said to have excellent exploration potential at depth, along the western flank of the deposit and in several geochemical anomalies. The agreement also enables PK to earn a half interest in new discoveries in the area by spending US$5 million on exploration over five years.
Princess will be acquired by paying US$15 million and about 107 million shares priced at 70 cents per share. The transaction is subject to the approval of shareholders and regulators, as well as due diligence.
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