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Gold explorer Coolgardie Minerals Limited (ASX:CM1) made an announcement on 31 December 2018 stating that it has sold the third Parcel of oxide ore from the Geko pit to Northern Star Resources for net revenue of $1.668 million (excl GST).
The sold oxide ore is representing part of the high-grade supergene zone located in the western area of the pit. The Mining reserve Grade in this ore Zone has increased by 35 percent from 4.40g/t to 5.94g/t Au mainly due to the comprehensive review which was conducted by the Company after the poor reconciliation of the mined grade of the Geko operations in November and early December.
The companyâs mining contractor, SMS Innovative Mining Pty Limited (SMS) has been working alongside CM1 for the optimization of future mining by a 3-stage process. The first stage involves mining 15,000 tonne parcel of high-grade oxide ore, the second stage consists in developing a comprehensive plan to mine the oxide section of the orebody, and the third stage involves mining the remainder of the orebody (~1.1m tonnes at 1.7 g/t Au) but this will be dependent on the success of Stage 2 and securing treatment arrangements for the ore.
Besides, working closely with CM1, SMS had also agreed to support CM1 by offering CM1 extended trading terms on outstanding invoices totaling $9.39 million (including GST), subject to certain conditions being satisfied. The receipt of net revenue of $1.668 million (excl GST) from Northern Star Resources has satisfied the first milestone for the forbearance arrangement for the $9.39 million. As per the arrangements with SMS, the company was supposed to receive net proceeds of at least $1.5 million in cash from the sale of Geko ore before 7 January 2019. As per the arrangements, CM1 is expected to repay $2.02mn of the $9.39mn by 28 February 2019 and remaining balance by 31 March 2019.
Northern Star Resources has an option to purchase an additional circa 90,000 tonnes of oxide ore with a grade above 2.75g/t Au before 31 March 2019.
The company has also undertaken RC drilling immediately west of the western perimeter of the Geko pit to determine whether the high-grade supergene zone extends outside the current pit design. The company has completed four vertical RC holes and intersected mineralization in three holes with the best intersection of 5m @ 19.09 grams per tonne Au in hole GGCO431 from 37m downhole.
In the last three months, the share price of CM1 decreased by 42.86 percent as on 28 December 2018. CM1âs shares traded at $0.060 with a market capitalization of circa $6.21 million as on 31 December 2018 (AEST 4:00 PM).
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