Explorer Viking Mines has agreed to acquire a series of prospective gold projects in WA’s Eastern Goldfields, spanning the historical First Hit mine and a number of advanced exploration targets.  

Viking Mines (ASX:VKA) today announced it had struck the conditional deal, which will see it take on 100% of Red Dirt Mining Pty Ltd – the current owner of the projects, which incorporate the historic First Hit mine.

First mined in 1930 and most recently by Barra Resources and Barminco between 2001 and 2002, there is some serious expansion potential at First Hit where mineralisation remains open above, below and laterally adjacent to the historic resource.

Historic drill results by Barra include the the following intercepts below the current resource:

  • 4.9m at 64.8 grams per tonne gold from 62.1m;
  • 3.7m at 22.2g/t gold from 64.3m;
  • 4.5m at 10g/t gold from 55.8m;
  • and 3m at 9.3g/t gold from 273m.

Historical intercepts laterally adjacent to the historical resource include:

  • 3m at 77.6g/t gold from 224m;
  • 1m at 66.7g/t gold from 164m;
  • and 1m at 15.4 g/t gold from 255m.

Assays reported above the mined workings came in at:

  • 4m at 26.1g/t gold from 58m (un-stoped area);
  • 2m at 13.1 g/t gold from 27m (above the highest level mined);
  • 2m at 5.1g/t gold from 18m (near surface splay);
  • and 4m at 2.3g/t gold from 38m (near surface splay).

The project was only mined to about 220m in its previous life. The acquisition also includes five defined exploration targets the company believes have the potential to replicate First Hit.

No exploration has been carried out on the projects since 2002, when the mine was closed due to gold prices of less than US$325 per ounce.

The mine produced 30,830 ounces of gold in 2001-02, and the project’s cash costs at the time of closure came in below US$345/oz – a remarkable number, though one Viking said would need to be revised against the current economic and social climate.

Viking First Hit
The historic box cut entry to the First Hit mine. Pic: Company supplied.

The project is covered by a mining lease valid to 2032. Significant development infrastructure is also present at First Hit.

Viking chairman Ray Whitten said the acquisition of the project was extremely important for the company.

“After searching the world and reviewing numerous project opportunities, I am extremely happy that the company has been able to acquire the high-grade First Hit gold mine as part of the Red Dog project package,” he said.

“This represents an excellent opportunity to add development assets and ounces to Viking’s existing greenfield exploration portfolio of mineral projects.

“Given the board’s view on where we think the gold price is heading in the coming years, we think this acquisition alongside our existing assets will expose our shareholders to the expected upside in the price of gold bullion.”

Viking said updating the current 1999 JORC code complaint resource to 2012 standards would be a priority moving forward.

Viking First Hit
The projects being acquired. Pic: Company Supplied.

Not just a historic mine

Located 45km west of the town of Menzies, First Hit is strategically located – the project sits within 50km of Ora Banda Mining’s Davyhurst Mill and there are six mills in relative proximity.

The sits at the northern end of the strike-extensive Ida fault, which is host to significant gold mineralisation along its strike including the Bullabulling and Mt Ida gold mines and the Davyhurst Mining Centre incorporating the Mulline and Riverina mines.

Importantly for Viking, the acquired package includes a number of exploration targets in this coveted ground which are untested using modern exploration techniques.

The company plans to advance these targets using close-spaced aeromagnetic surveying, modern infill geochemistry and spectral analysis for drill target definition.

Viking First Hit
First Hit’s location within the broader geological region. Pic: Company Supplied.

Capital at hand

To progress work on the acquisition, Viking has announced plans to raise more than $1.5 million by capital raising.

The explorer has received firm and binding commitments to raise $750,000 by way of a share placement.

Shares will be placed at 1c each across two tranches – the first within seven days and the second issued subject to the approval of shareholders.

In conjunction with the placement Viking is also planning a rights issue to raise up to $784,294.64 at a price of 1c per share, which will be offered to existing shareholders at a 1:4 basis.

The funds raised will be used for working capital on the Red Dirt projects.

Viking also currently owns a series of gold projects in Ghana and two coal projects in Mongolia.

Today’s acquisition will be made in exchange for 410 million fully paid ordinary VKA shares and 85 million performance shares.

The performance shares will be convertible to VKA shares on a one-for-one basis subject to the achievement of key milestones. A separate company, GTT Ventures, will receive 33 million shares on completion of the deal for the provision of advisory services.

At Stockhead, we tell it like it is. While Viking is a Stockhead advertiser, it did not sponsor this article.