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Labyrinth Resources Limited (ASX: LRL) (‘Labyrinth’ or ‘the Company’) advises that it has agreed to sell the Labyrinth and Denain gold projects in the Abitibi region of Quebec, Canada (‘Projects’) along with related assets and mining information (together, ‘the Canadian Assets’) for US$3.5 million cash.
The sale of the Canadian Assets follows Labyrinth’s strategic decision to switch its focus to generating shareholder value through exploration and resource extension at its Comet Vale tenement package in Western Australia.
The Company acquired the Canadian Assets in September 2021 after entering into a Project Acquisition Agreement (‘PAA’) with G.E.T.T. Gold Inc. (‘GETT’). The original terms and conditions of the PAA and subsequent variations were set out in the Company’s ASX announcements dated 2 September 2021, 9 November 2022, 3 April 2023, 1 May 2023 and 4 January 2024.
As part of the process to sell the Canadian Assets, Labyrinth has entered into a Sale and Purchase Agreement (‘SPA’) with Gold Projects WA Pty Ltd (‘GPWA’). GPWA is a special purpose vehicle set up to facilitate the transaction. The shareholders of GPWA are Carey Group Holdings Pty Ltd (a First Nation mining, civil and construction company) holding 51% and Erasano DMCC (‘Erasano’), a precious metals trading company based in Dubai, holding 49%.
GPWA’s obligations under the SPA are guaranteed by Erasano.
Neither GPWA, Erasano, their directors or proposed directors, are related parties or substantial shareholders of the Company, nor entities referred to in Listing Rule 10.1 or associates of any of them.
The key terms of the SPA are:
- consideration of a USD$3,500,000 cash payment to the Company;
- payment by GPWA of a cash deposit of USD$175,000;
- settlement of the sale and purchase of the Canadian Assets is subject to the satisfaction or waiver of the following key conditions precedent on or before 31 January 2024 (or such other date as agreed):
- Labyrinth obtaining all necessary regulatory and shareholder approvals pursuant to Chapter 11 of the ASX Listing Rules and the Corporations Act 2001 (Cth);
- Labyrinth receiving the necessary consent from GETT to novate or assign the PAA to GPWA, including GPWA assuming all royalties and physical gold payment obligations under the PAA;
- GPWA being registered as the holder of the Mining Rights (excluding the 15% registered interest in the Denain Mining Rights held by Bell Copper Corporation);
- there being no material adverse change in respect of the Projects; and
- Labyrinth receiving any necessary consents from each counterparty to the royalty contracts relating to royalties payable under the PAA to novate or assign each of the royalty contracts to GPWA, and the relevant parties entering into deeds of assignment or novation for the assignment or novation of each royalty contract (on terms satisfactory to the GPWA acting reasonably), which are conditional only upon settlement occurring under the SPA; and
- the Rocmec Hypothec being discharged and removed by GETT and the Company providing GPWA with evidence of the discharge and removal.
The SPA otherwise contains customary terms for a transaction of this kind.
The ASX has confirmed that based solely on the information provided, Listing Rules 11.1, 11.2 and 11.4 do not apply to the sale.
The intended use of funds received for the sale is as follows:
Labyrinth Chief Executive Officer, Jennifer Neild said, “The Sale of the Canadian Assets ensures Labyrinth is well placed to enter a new stage of exploration and growth in Western Australia. The cash injection into LRL provides significant optionality in the prolific WA Goldfields region that hosts the Company's 51% owned Comet Vale project. We look forward to communicating Labyrinth's strategic intent in the coming months.”
The Company is in compliance with its continuous disclosure obligations.
Click here for the full ASX Release
This article includes content from Labyrinth Resources, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
LRL:AU
41m at 2.01g/t Au from Surface at Murchison South Gold Project
HIGHLIGHTS
- RC drilling from the first two (2) holes at the Murchison South gold project has intersected high grade gold, providing initial validation of historical drilling results
- Significant assay results include (down hole widths):
- 25PFRC001 (Hole 1)
41m @ 2.01 g/t from surface; including 15m @ 2.01 g/t from 2m, and
5m @ 10.01 g/t from 36m
- 25PFRC002 (Hole 2)
22m @ 0.70 g/t from 33m; including 10m @ 1.05 g/t from 33m, and
1m @1.61 g/t from 45m
- 25PFRC001 (Hole 1)
- A total of fourteen holes were drilled for 1463m at an average depth of 104m, at the Blue Heaven deposit
- Results from the first two drill holes align with the interim mineralisation analysis completed by Mining Plus, with the holes having intercepted the main rock types and showing a well- defined weathering profile
- Assays from the remaining 12 holes are due next week
Commenting on the results CEO Jeremy Bower said:
“These fantastic initial results give us a great start towards validation of the historic drilling and resource model at our Blue Heaven deposit. We have hit some high-grade shallow gold intervals, which align with the model, which is very encouraging, and we now eagerly await assays from the remaining 12 holes so we can get a complete understanding of our project.”
Figure 1: Murchison South Gold Project showing the Blue Heaven deposit with current and historic drilling.
The drill program comprised 14 RC holes for a total of 1463m at an average depth of 104m and collection of 1588 samples for assay. This announcement relates to the first two (2) drill holes only (Refer to JORC Table 1 Appendix A for full results and collar table from holes 25PFRC001 & 25PFRC002).
Figure 2: Cross Section.
The weathering zone is not intercepted in this cross-section but appears further south from Section 3 (Figure 1). Cross-Section 1 (Figure 2) displays multiple high-grade zones that broadly align with the existing model. Low-grade zones (yellow) envelop the high-grade mineralisation and correlate well with the new drilling.
Once all the drilling results have been received, Mining Plus will have sufficient data to interrogate the results before integrating them into their model. This will guide the next steps in optimizing pit designs at the Blue Heaven deposit and additionally will help determine the number and locations of planned diamond drill holes, which will be the source of sample material for the required metallurgical testing and geotechnical analysis.
Key Next Steps
- Receipt of remaining assay results
- Mining plus continue their independent mining review
- Metallurgical test work
- Negotiations with mining contractors and processors
Click here for the full ASX Release
This article includes content from Reach Resources, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
