ASX-listed Cosmo Metals has signed a term sheet to acquire La Zarza Minerals, which holds the tenements comprising the Kanowna gold project (KGP), in Western Australia.
Cosmo MD James Merrillees says the potential at the KGP is compelling, with proven gold mineralisation adjacent to the world-class Kanowna Belle deposit, including headline drill intercepts of 18 m at 5.3 g/t gold and 10 m at 4.7 g/t gold.
“The acquisition of the KGP will complement the company’s existing base metals and lithium portfolio at Yamarna and is a low-cost entry into the prolific Eastern Goldfields, adjacent to world-class projects with exceptional infrastructure,” he adds.
The KGP is 1 km west of Northern Star Resources’ Kanowna Belle gold operations, which has produced more than 5.4-million ounces of gold since 1993 and currently runs at a production rate of about 150 000 oz/y.
The KGP includes drill-ready targets at Don Álvaro, Laguna Verde and WKL, with numerous additional surface and shallow air core anomalies remaining untested, the company points out.
Cosmo has the exclusive right, until February 19, to acquire all shares in La Zarza. Should it exercise that right, it will pay an initial cash consideration of $200 000 within 14 days.
This will be followed by the issue of $400 000 in Cosmo shares.
The purchase consideration also includes a $200 000 deferred payment, payable within six months of exercising its right to acquire La Zarza, as well as the grant of a 0.5% net smelter royalty over gold produced from the KGP tenements.
To help fund the acquisition, as well as to complete due diligence, initial exploration and drill planning at KGP, Cosmo will undertake a private placement to raise $300 000. It will issue about six-million new shares at a price of $0.05 a share.
Following the successful completion of due diligence in February, the company expects to immediately start up to 2 000 m of reverse circulation drilling at KGP to test high-priority targets at Don Álvaro, Laguna Verde and WKL.