Comet Resources higher on completing acquisition of Santa Teresa Gold Project

Comet Resources Limited (ASX:CRL) is keen to get on the ground after completing the first stage of an agreement with El Alamo Resources Limited (EARL) resulting in 50% ownership of the Santa Teresa Gold Project. This Share Purchase and Joint Venture Agreement with EARL’s shareholders includes an option for Comet to obtain 100% of the project in Baja California, Mexico, within two years. Historical production in the surrounding El Alamo district is estimated at between 100,000 to 200,000 ounces and Comet intends beginning work on re-assaying historic drill core and preparing a JORC-compliant resource estimate. Shares higher Shares are more than 27% higher at 2.7 cents. Comet managing director Matthew O’Kane said: “From the initial announcement of this transaction to closing, the gold price has increased over US$200 per ounce. “This has increased the potential value of Santa Teresa for Comet and we are now looking forward to commencing work on the historical drill core and a maiden JORC resource. “In parallel, we will plan our initial field activities. The relatively underexplored nature of the project and the richness of the district provides a lot of scope to extend mineralisation.” High grades There have been 32 diamond holes drilled delivering numerous high-grade intersections including: 2 metres at 32.4 g/t from 19 metres; 1-metre at 958.4 g/t from 239 metres; 2.5 metres at 38 g/t from 174 metres; 3.9 metres at 39 g/t from 121 metres; 3 metres at 19.9 g/t from 214 metres; and 1-metre at 125.9 g/t from 83 metres. There is strong exploration upside and the opportunity to extend current mineralisation due to the under-explored nature of the tenements. Stream Financing agreement To fund the company’s work program a Stream Financing agreement with Raptor Capital International Limited is in the advanced stage of documentation and is expected to complete in the near-term. This binding gold streaming and royalty financing agreement is for up to US$20 million with an initial minimum amount of US$6 million. “Important first step” EARL director and Raptor Capital CEO Paul Ray said: “The closing of the SPA represents an important first step in developing the Santa Teresa Gold Project into a high-grade operating gold mine. "The acquisition by Comet adds a well-credentialed board and management team that have over 50 years of combined exploration, development and mining expertise. "The pending gold stream financing by Raptor, which is subject to definitive documents being finalised, is expected to fully fund the project into production. "We are looking forward to working together with the Comet team on this exciting project.” In gold-rich region Santa Teresa comprises two mineral claims totalling 202 hectares in the gold-rich El Alamo district, about 100 kilometres southeast of Ensenada, Baja California, and 250 kilometres southeast of San Diego, California. Regional geology of the Santa Teresa Gold Project. The project is prospective for high-grade gold, with an existing non-JORC inferred resource of 64,000 ounces at an average grade of 8.7 g/t and at a cut-off grade of 4 g/t. In addition to the two claims, two additional claims totalling a further 378 hectares in the surrounding El Alamo district are being acquired from EARL. Acquisition terms This acquisition will be completed on a staged basis, with Comet acquiring an initial 50% interest by making a refundable $100,000 cash payment to the shareholders of EARL. The balance of the consideration for the initial 50% interest is to be paid upon satisfaction of the conditions subsequent. Comet will acquire the remaining 50% interest upon a decision to mine being made in respect of the project within a two-year period. Initial work plans Initial site work will involve assessing near-term production opportunities within the Santa Teresa licence area itself and the other licences proposed to be acquired in the El Alamo district. Due to the recent increase in the gold price, work will also investigate options to increase the size and confidence of the resource prior to commencing mine development activities.