Aim-quoted Alien Metals will buy the past-producing Elizabeth Hill silver project, which has an “exceptionally” high mine head grade averaging 2 195 g/t silver or 70.24 oz/t.

The project, located 40 km from the Dampier port in Western Australia, was mined between 1998 and 2000 through underground mining, primarily between the 62 m and 102 m levels. It produced 16 800 t of ore, generating 1.17-million ounces.

“The historical information on the property viewed to date gives us excellent indication that this project has significant upside potential, especially as silver prices are now nearly four times the average price when production ceased in 2002. Of note, some of the largest silver ‘nugget’ specimens in Australia have been pulled from Elizabeth Hill,” said Alien technical director Bill Brodie Good.

Alien, which was previously Arian Silver, has been scouting for new project acquisitions. Good said that the Elizabeth Hill project was a great addition to Alien’s silver assets in Mexico and it was also complementary to the Hancock Ranges and Brockman iron-ore projects located in Western Australia.

Alien will acquire the Elizabeth Hill project from Karratha Metals Group (KMG) for consideration of 200 000 000 common shares and 50 000 000 warrants, which KMG will distribute to its shareholders.

The shares would be deemed to be issued at a price of £0.0014 each, and each warrant would entitle the holder to purchase one share at a price of £0.0025 for 18 months from the date of allotment of the shares.

Pursuant to the agreement, Alien will enter into a royalty agreement with a third party under which the third party will be entitled to a royalty of 2% from all net smelter revenue from the project.

Under the terms of the agreement, Alien will obtain a legal opinion on the project by no later than December 6. Upon obtaining the legal opinion and at its sole election, Alien would lend KMG up to A$120 000.

Daniel Smith is the sole director and shareholder of Kingmaker Metals, which holds about 22% of the issued share capital of KMG. In the event the transaction completes and KMG undertakes the distribution, Kingmaker would hold 2.5% of the issued share capital of Alien.