September 05, 2019 (ACCESSWIRE via COMTEX) -- Announcement to the Australian Securities Exchange and Toronto Stock Exchange
SUBIACO, WESTERN AUSTRALIA / ACCESSWIRE / September 5, 2019 / RTG Mining Inc. (ASX:RTG) /zigman2/quotes/203311399/delayed CA:RTG 0.00% (OTCQB:RTGGF) ("RTG" or "the Company") is pleased to announce that it has entered into a Sale and Purchase Agreement ("SPA") with White Cliff Minerals Limited ("WCN") to acquire its majority (90%) stake in the high grade Chanach Gold and Copper Project ("Chanach Project") in the Kyrgyz Republic ("Transaction").
Highlights of the Transaction include:
Strategic addition to RTG's portfolio with an existing high grade JORC compliant Inferred Mineral Resource of 2.95 Mt @ 5.11 g/t Au for 484,000 ounces of Au and 17.23 Mt @ 0.37% Cu for 64,000t of Cu1 (141.1 Mlbs Cu) from only limited drilling to date.
Acquisition cost of US$3.65 / ounce of Gold and US$0.0063 / pound of Copper.
Consideration of US$2.15 million cash and US$0.5m in RTG shares (escrowed for 12 months).
Transaction subject to WCN shareholder approval with a target completion date of mid to late October 2019.
Unanimous WCN board recommendation and shareholder support statements from 20% of WCN's shareholders to vote in favour of the Transaction (both in the absence of a superior proposal).
Experienced technical expert, advising RTG, believes the exploration potential at the Chanach Project is excellent.
The Chanach Project is located in the prolific southern Tien Shan metallogenic belt, which runs more than 1,500 km from Uzbekistan through to China and hosts one of the world's largest open pit gold mines, Murantau (175 Moz  ) with production believed to be in the order of 2 million ounces per annum  . RTG have appointed Mr. Greg Hall of Phoenix Gold International and former Chief Geologist for Placer Dome, as a consultant given his knowledge of the Chanach Project and other projects in similar geological settings.
The Chanach Project has extensive outcropping mineralised geology with high grade gold veins from surface and significant gold and copper Inferred Mineral Resources. With only 5% of the identified strike length tested to date, RTG believes the Chanach Project has substantial upside. The Chanach Project area is considered to be highly prospective for world class epithermal gold, porphyry copper-gold and polymetallic skarn deposits with numerous targets already identified.
To date the limited exploration activities have defined an Inferred Mineral Resource of 2.95 Mt @ 5.11 g/t Au for 484,000 ounces of Au and 17.23 Mt @ 0.37% Cu for 64,000t of Cu  .
Figure 1: Chanach Project Location
RTG has agreed to acquire a 90% interest in the high grade Chanach Project in the Kyrgyz Republic (License AP590) through the acquisition of 100% of PB Partners (Malaysia) Pte Ltd, a wholly owned subsidiary of WCN. The Transaction is subject to the approval of WCN shareholders under Chapter 11.2 of the ASX Listing Rules. The purchase price consists of: (i) cash consideration of US$2.15 million: and (ii) US$0.5 million in new RTG shares to be issued at a price equal to the 5-day VWAP of the RTG shares on the ASX for the 5 trading days leading up to completion of the Transaction.
The purchase price, together with the planned initial drill program have been fully funded by a new unsecured loan of US$2.5 million, obtained by RTG from an external financier, on arm's length terms and conditions.
This represents a highly attractive and value accretive deal for RTG with an acquisition cost of only US$3.65 per gold ounce and US$0.0063 per pound copper (metal contained in Inferred Mineral Resources).
On completion, RTG will be manager and operator of the Chanach Project Joint Venture company (Chanach LLC) and will solely fund operating expenditures until completion of a Bankable Feasibility Study at which time, funding will then be contributed on a pro-rata basis in accordance with Chanach Project interests.
The 10% joint venture partner is represented by two local brothers, both geologists, who have a strong understanding of the region, orebodies and new targets for extension, with good local support and strong relationships with the mining authorities. They have been very supportive of the RTG acquisition, waiving their pre-emptive rights.
WCN has provided customary exclusivity undertakings to RTG in connection with the Transaction, including no shop and no talk restrictions, and provided RTG with a notification right in respect of any competing proposal.
In addition to WCN shareholder approval, the Transaction and the transactions contemplated in the SPA are subject to any applicable regulatory approvals and no material adverse change/breach of warranties.
The Kyrgyz Republic is a stable, democratic and mining-friendly jurisdiction in Central Asia bordering China and Kazakhstan. With four new mines approved since 2014 and with another mine under construction by Chaarat Gold Holdings Limited (aim:CGH "Chaarat"), there is strong government support for new mining projects and a growing awareness and recognition of both; the significant economic contribution made by the country's biggest industry and the potential for this contribution to grow rapidly, with the gold industry already contributing half of the country's industrial output and 60% of export earnings.
Chaarat has two new projects planned, with the Tulkubash Mine under construction (target production of 94,000 to 110,000 ounces per annum  ) to be followed by the Kyzyltash mine which has measured and indicated resources of 4.5 million ounces @ an average grade of 3.7 g/t  , with target production in the order of 200,000 to 300,000 ounces per annum  .
The Kumtor mine operated by TSX listed Centerra Gold Inc. has produced over 12 million ounces during its 22 years of uninterrupted profitable production since inception in 1997, with current production in excess of 500,000 ounces per annum  . It has recently finalised negotiations with the Kyrgyz Government which has resulted in a significant re-rating of the company on the Toronto Stock Exchange, trading now with a market capitalisation of approximately C$3.5 billion. In addition to Centerra, there are other major players including Zijin Mining Group Co. Ltd who are operating, exploring and expanding their investment in the country.
The Kyrgyz Republic has a simple revenue-based tax system, strong rule of law, secure licensing processes and does not have local project ownership requirements. Mining infrastructure is well established, with a readily available and skilled mining labour force.
The Chanach Project (prospecting license AP590) is located in the North Western part of the Kyrgyz Republic in the Jalal-Abad province and covers an area of 57.25 km  of the Chatkal Ranges inside the south-western Tien Shan metallogenic belt.
Regionally, the world class Tien Shan system spans from Uzbekistan in the west across the Kyrgyz Republic and into Mongolia and China and is one the best-endowed gold provinces in the world. It hosts multiple styles of mineralisation due to its complex tectonic history. The juxtaposition of multiple crustal sections within the Tien Shan, including volcanic arcs, continental margins, accretionary and fore-arc complexes, and continental collisional zones, has resulted in a complex mix of overlapping mineralised systems which developed in different crustal environments. These mineralising systems are prolific producers of base and precious metals. The geology of the south-western Tien Shan is generally regarded as being highly fertile ground for sedimentary hosted gold deposits, copper-gold porphyry deposits and their associated epithermal and polymetallic skarn deposits.
The underexplored system plays host to some significant discoveries and operations including very large sediment hosted gold deposits such as Kumtor in Kyrgyzstan (19 million ounces  ) and Muruntau in Uzbekistan (175 million ounces  ), which is recognised as one of the world's largest gold deposits. It also hosts large porphyry copper deposits like Almakyr in Uzbekistan. Major deposits located within 100km of Chanach contain inventories of up to 93 million ounces of gold and 25 million tonnes of copper (Figure 1 and Figure 2).
Figure 2: The Gold Endowment of the Tien Shan Metallogenic Belt7
DISCOVERY & DRILL RESULTS
The Chanach Project area was discovered around 1963 with geological mapping and surface sampling intermittently up to 2010. The geology of the Chanach Project area is prospective for epithermal gold deposits, porphyry copper deposits and polymetallic skarn deposits. The project area has outcropping mineralised geology seen as multiple high grade outcropping epithermal veins and skarns, which have indicated several porphyry targets.
From 2010 more modern exploration has taken place with approximately US$8.0 million spent by WCN on exploration, of which US$5.7 million is attributable to the Chanach Gold Project, with the balance spent on Chanach Copper Project exploration and resource development.
Targeting has been enhanced by various structural and geophysical surveys including a structural geology study completed by Orefind in 2017, a ground magnetics study by Southern Geoscience in 2016 and a geophysical study completed by Baoding Geological Engineering Institute in 2011.
The Chanach Project is a target-rich environment with 2019 planned exploration focussing on multiple gold targets designed to extend the current Inferred Mineral Resource.
Total exploration drilling includes 142 reverse circulation and diamond holes totalling approximately 19,500 metres, of which 111 drill holes (87 RC and 24 diamond) for a total length of 14.1km can be attributed to the Chanach Gold Project and the balance to copper exploration and the development of the Chanach Copper Project.
To date, the Chanach Project has generated an Inferred Gold Mineral Resource of 484,000 ounces Au at a grade of 5.1 g/t at an extremely cost-effective rate of US$11.80 / ounce and this metric is expected to improve with the ongoing enhancement and refinement of geological understanding and targeting.
Exploration drilling at the Chanach Gold Project commenced in 2014 and to date there have been spectacular intersections of gold mineralisation spanning across the project area, as previously reported by WCN.
Significant intervals from the Quartz Gold Zone include:
UGZ-15-35 - 8m @ 57.08g/t Au from 75m including 1m @ 85.53 g/t Au from 76m, 1m @ 89.34g/t Au from 80m followed by 1m @ 73.28 g/t Au from 81m.
ERC16-035 - 7m @ 23.52 g/t Au from 45m including 1m @ 149.41 g/t Au from 45m.
ERC16-036 - 12m @ 15.65 g/t Au including 1m @ 63.24 g/t Au from 82m followed by 1m @ 95.12 g/t Au from 83m.
Significant intervals from the Sandstone Gold Zone include:
UGZ-15-33 - 4m @ 99.15 g/t Au from 65m including 1m @ 348.48 g/t Au from 67m.
UGZ-15-32A - 3m @ 41.45 g/t Au including 1m @ 71.58 g/t Au from 53m.
Significant intervals from the Lower & Upper Gold Zone include:
LGZ-15-29A - 6m @ 38.40 g/t Au from 26m with 4m @ 56.46 g/t Au from 26m including 1m @ 49.79 g/t Au from 26m, 1m @ 23.55 g/t Au from 27m, 1m @ 95.22 g/t Au from 28m and 1m @ 57.29 g/t Au from 29m.
CH14-18 - 4m @ 23.83 g/t Au from 85m including 1m @ 30.19 g/t Au from 86m.
Readers are advised that these assay intervals have not been top-cut prior to reporting and true mineralisation widths are not reported. Mineralisation is expected to be sub-vertical. Intervals selected have used a lower cut-off of 0.50 g/t Au. Locations of significant drill intercepts with respect to the mapped mineralised zones are shown in Figure 3.
Figure 3: Locations of Significant Drill Intercepts at Chanach Gold Project
RESOURCE GROWTH POTENTIAL
The current gold resources at Chanach are open at depth and along strike. RTG Consultant and Chartered Professional Geologist, Greg Hall of Phoenix Gold International and former Chief Geologist for Placer Dome, has visited the Chanach Project area and notes: "the extensive red hematite staining in the project area is an indication of the size of the system, which along with other geological factors and anomalies would indicate an exploration target materially greater than the current Inferred Gold Mineral Resource with further upside in several porphyry and skarn targets that remain untested"
The mineralised faults (vein groups), that are currently defined by field mapping at the Chanach Gold Project, span over a 3km strike length with drilling along only 5% of the strike length identified and mapped to date and with drilling to an average depth of only 120m. Given the existing resource is open at depth, with 95% of veins as yet untested by drilling over the existing 3km strike length and recent mapping programs likely to extend the mineralised strike length by a further 4km, the potential for resource growth is thought to be significant. Additionally; the Chanach Copper Inferred Mineral Resource is open at depth and along strike, with multiple additional porphyry targets identified for testing including several outcropping copper zones 4km to the east of the current resource. Copper skarn mineralisation has also been identified along porphyry-limestone contacts over a 2km trend within the Chanach Project area.
Figure 4: Mineralised Faults (Blue) Relative to Inferred Gold Resources (Red)