Southern Gold (ASX:SAU) will proceed with developing its Cannon Gold Project near Kalgoorlie, Western Australia, with Metals X (ASX:MLX) after Silver Lake Resources (ASX:SLR) waive its pre-emptive right.
This will provide it with a clear pathway to make the transition from gold explorer to gold producer.
Southern Gold will now work with Metals X to finalise a binding Mine Finance and Profit Sharing Agreement.
The original non-binding term sheet had proposed a mine finance and profit sharing agreement to develop and mine the Cannon gold deposit.
Metals X will manage all services required for mining, haulage and treatment of ore from Cannon in accordance with approved budgets and programs.
Operating activities will be charged on an at-cost, open-book basis for the duration of open pit mining and/or underground mining.
Metals X will also provide Southern Gold with a loan facility for $500,000 to fund pre-development costs and regulatory approvals.
Pre-Feasibility Studies had estimated that Cannon could produce 68,200 ounces of gold over a mine life of 36 months and generating free cash flow of $12.4 million.
The project is located 30 kilometres east of Kalgoorlie and includes 30 priority anomalies identified from regional geochemical auger program conducted over the eastern area of the Bulong Gold Project. Six of these have been prioritised.
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