Musgrave Minerals Commences Drilling at Lake Austin North as part of Evolution Joint venture

Australian exploration company Musgrave Minerals Ltd (ASX: MGV) has been focused on accelerating the exploration at its advanced gold and copper project- the Cue Project in Western Australia’s Murchison district. Musgrave’s objective is to significantly increase the gold and other base metal resources at the project via exploration.

In order to fast track the exploration at the project, Musgrave entered into an Earn-in and Exploration Joint Venture Agreement with Evolution Mining Ltd (ASX:EVN) in September 2019 for exploration centered on the Lake Austin Area of the Cue project.

Musgrave’s in-house expertise, coupled with the extensive technical knowledge and financial resources of Evolution Mining - a highly regarded explorer and a leading gold producer, is expected to greatly benefit Musgrave in the exploration at Cue.

Drilling commences at Lake Austin North

Two months after entering into the joint venture agreement with Evolution Mining, Musgrave has now commenced drilling at Lake Austin North, covering the northern extension of the shear corridor that hosts Musgrave’s wholly owned Break of Day and Lena gold deposits.

In an announcement made on 18 November 2019, Musgrave confirmed the ongoing diamond drilling at the Cue Project, focused on testing four high-priority gold targets at the Lake Austin North prospect.

This initial program will consist of ~ 4 drill holes and will take ~ 4-5 weeks to complete, with the first assays expected in early February next year.

The recently commenced drilling program will consist of a minimum of 1,200m of diamond drilling to test four targets for high-grade basement gold mineralisation below transported cover at Lake Austin North.

As per the terms of the agreement, the drilling program will be funded by Evolution and will be managed by Musgrave.

The drilling will focus on identifying the basement gold source of large geochemical halos defined by aircore drill results that include:

• 50m @ 1.1g/t Au (19MOAC173)
• 26m @ 0.62g/t Au to EOH (19MOAC017)
• 17m @ 0.27g/t Au to EOH (19MOAC015)
• 4m @ 1.09g/t Au to EOH (19MOAC007)

Evolution joint venture area and prospect locations (Source: Company’s Report)

Major highlights of Evolution Mining Earn-in and JV Agreement

• Announced on 17 September 2019, the JV agreement covers Lake Austin and surrounding exploration tenure but excludes all Musgraves’s existing gold resources and the Mainland option area.
• As per the terms of the agreement, Evolution can earn a 75 per cent interest in the JV Area by spending $18 million within 5 years; and if Evolution failed to spend the entire amount within stipulated time, Musgrave will retain 100% ownership.
• Evolution has committed to a minimum commitment of $4 million in the first 2 years.
• Musgrave will manage activities during the minimum expenditure period.
• On completion of the earn-in, a joint venture will be formed between Evolution (75%) and Musgrave (25%) and each party will contribute to expenditure pro-rata or dilute.
• If a party’s interest in the JV Area dilutes to below 10%, that party’s interest will automatically convert to an 8% net profit interest on any minerals produced and sold from the JV Area.
• Following a decision to mine, Evolution will offer to finance Musgrave’s share of all development costs in relation to any production area. The financing will be repayable with interest from 75% of Musgrave’s proportionate share of net mine cash flow.
• The Agreement is subject to conditions precedent typical of such a transaction including the execution of the Subscription Agreement in regard to the Placement.

With the successful Phase 1 drilling campaign at the Hollandaire and Hollandaire West deposits, Cyprium Metals recently announced significant results from a regional surface sampling and field mapping program at the Eelya South prospect of Cue Copper Project.

Whats Ahead?

• Musgrave is continuing its reverse circulation (RC) drilling programs, focused on expanding the existing resources at Break of Day and Lena through extensional drilling and identifying new gold discoveries at Mainland;
• Mainland drilling results to come in late November, followed by Lena and Break of Day results;
• The company is working towards delivering a Lena resource update in Q1 2020;
• Assay results from the Lake Austin North JV drilling are expected in early February;
• On the Joint Venture area over Lake Austin at Cue, Evolution and Musgrave are planning a large aircore drilling program to further define gold targets for basement drill testing. This drilling is scheduled to commence in the first quarter of 2020.

MGV traded at a price of $0.071, up by 2.9% on 18 November 2019. The stock has generated a return of ~17% in the last six months.

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