+++++++++++++++++++++++++ The Directors of Ashburton Minerals Ltd ("Ashburton") are very pleased to announce that Ashburton has today signed a Heads of Agreement ("the Agreement") with Delta Gold Limited ("Delta", a wholly owned subsidiary of AurionGold Limited, now controlled by Placer Dome) encompassing the terms for the acquisition by Ashburton of the Drummond Basin Gold Assets ("the Assets") in Queensland.
The Assets include:
* a 315,000 oz gold resource at Wirralie gold mine;
* three tenement packages totalling some 3,200 sqkm with excellent exploration potential;
* the Wirralie 1.5 Mtpa CIP treatment plant and infrastructure, administration buildings, accommodation camp, sundry vehicles, machinery, stocks and spares, an all weather airstrip, the Yandan heap leach pad, the Wirralie exploration office;
* an extensive exploration database and technical information.
In summary, under the terms of the Agreement, Ashburton is to pay Delta $600,000 in cash, $400,000 in shares and $2 million in royalties from production, after the first 50,000 oz, where the spot gold price is above A$560/oz. By acquiring the Drummond tenements, Ashburton is also obliged to make arrangement to replace the attaching environmental performance bonds of around $2.61 million. The transaction is conditional on Ashburton obtaining any necessary shareholder approvals and raising a minimum of $4.6 million by debt or equity by 30 April 2003.
The acquisition will enable Ashburton to work towards recommencing mining operations at the Wirralie gold mine, where remaining resources stand at 315,000 oz of gold, comprising an oxide resource of 1.18 Mt @ 1.07g/t (40,000 oz) and a sulphide resource of 3.58 Mt @ 2.39g/t (275,000 oz). Past production from Wirralie totals 477,000 oz of gold from open pit mining of oxide and deep lead resources to an average of 60m depth. Based on current information, Ashburton envisages being able to commence production within 18 months, by the middle of 2004, at an initial rate of 50,000 oz per annum. This will provide sufficient cash flow to fund ongoing development and exploration of the Drummond tenements as well as Ashburton's holdings in Western Australia, namely, the Ashburton and East Kimberley projects.
Studies commissioned by Ross Mining NL on the Wirralie sulphide resource investigated various processing routes and technologies, including BacTech, Bacox, GeoBiotics and ultra fine grinding (down to 10 microns) of the ore, with gold recoveries of up to 93% achieved from metallurgical samples. The least capital intensive method appears to be ultra fine grinding of the ore. The gold at Wirralie is dominantly fine grained (lesser than 30 microns), so Ashburton will investigate the applicability of the ultra fine grinding option as a priority. The method is being successfully utilised on sulphidic gold ore in a number of Australian gold mines, including at the Superpit in Kalgoorlie.
The Wirralie treatment plant ceased processing ore in February 2002, and is currently on care and maintenance. Due to the low water salinity in the district, the plant remains in excellent condition. Only minimal refurbishment would be required to make the plant operational.
The Drummond project area covers some 3,200sqkms of the northern portion of the prospective Devono-Carboniferous Drummond Basin, which can be separated into three distinct depositional phases, Cycle 1 - Cycle 3. Cycle 1 is characterised by widespread volcanic activity, being typically associated with andesitic volcanics, volcaniclastic sediments and tuffs. The Drummond project tenements are specifically focused on Cycle 1 lithologies. The Cycle 1 units host a large number of low sulphidation epithermal gold deposits, with total historical production and known reserves/resources within the Drummond Basin being in excess of 5 million ounces.
DEPOSIT CONTAINED GOLD AVERAGE GRADE (g/t)
Pajingo/Vera Nancy 3.0 million oz 15.0 Wirralie 0.7 million oz 2.7 Yandan 0.6 million oz 2.1 Mt Coolon 0.3 million oz 15.0 Twin Hills/Lone Sister 0.6 million oz 2.1
Gold production from within the Drummond project tenement area, since 1987, totals some 842,000 oz, being sourced from the Wirralie, Yandan, Belyando, Mt Coolon and Glen Eva open pit mines operated mainly by Ross Mining and Delta. According to recent published estimates, resources of around 358,000 oz remain within the Drummond Basin Project, with most of these being at Wirralie below 60m depth. Ross Mining and Delta undertook only limited regional exploration due to the demands of production on time and resources.
Historical information clearly indicates the potential for the discovery of further 1 million ounce deposits within the Drummond Basin. Numerous epithermal fields, of varying degrees of mineralisation (0.01 M oz - 0.1 M oz), are known to exist within the Drummond tenement group, some with characteristics similar to Pajingo (eg, Mt Coolon), though few have been fully evaluated. Ashburton will focus its regional exploration efforts at looking for high grade vein and hot spring style deposits, especially under Tertiary cover (30% - 40% of the tenement area) where little or no work has been done so far.
Ashburton has for a considerable time been investigating and bidding for projects of this nature and is very pleased that our efforts have been rewarded by securing the Drummond Basin project.
Ashburton is keen to begin work at the earliest opportunity. To that end, Ashburton has today signed a letter of engagement with Montt Capital to assist with the fundraising process.
Further details on the Drummond Basin acquisition and on the fundraising will be made available over the course of the next few weeks. Meanwhile, more information on current matters may be obtained by contacting the Company direct.
NOTE: The information contained in this report insofar as it relates to exploration results, Mineral Resources or Ore Reserves is based on information compiled by Mr Tom Dukovcic who is a Member of the Australian Institute of Geoscientists and who has sufficient relevant experience to qualify as a Competent Person as defined in the 1999 Edition of the "Australasian Code for Reporting of Mineral Resources and 0re Reserves". This report accurately reflects the information compiled by Mr Dukovcic.
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