Tick Hill Project
Superior Resources Limited (ASX Code: SPQ) announced on 11 August 2011 that it has reached agreement with Diatreme Resources Limited (ASX Code: DRX) to farm into the Tick Hill Gold Project, comprising granted Mining Lease No’s 7094, 7096 and 7097, located 110km southeast of Mount Isa in northwest Queensland
DRX had rights to the Tick Hill Gold Project under an Option and Sale Agreement with Mount Isa Mines Limited (ISA). Unfortunately it has taken considerable time for DRX to execute its option and assume ownership of the project. This has recently been achieved.
The agreement between SPQ and DRX gives SPQ the right to earn a 50% interest in the project by the:
The agreement is conditional on the completion of a number of administrative matters, including the renewal of the mining leases (completed), the transfer of the mining leases from ISA to DRX (in progress), an acceptable environmental authority relating to exploration of the mining leases and SPQ agreeing to ISA’s retained rights to a royalty on gold production from the mining leases and on ISA’s rights to downstream process, on commercial terms, any copper produced from the area.
ISA’s retained royalty on gold produced from the mining leases is set at a variable rate dependent on the annual grade of gold produced from mining. The royalty applies initially to gold produced above 5g/t Au and then, after total payment of royalties of $5M, to gold produced above 10g/t Au. A separate royalty rate applies to gold produced from tailings from previous mining.
The Tick Hill Gold Deposit was mined between 1991 and 1995 by Carpentaria Gold Pty Ltd (a subsidiary of MIM Holdings Limited) for the production of 513,333 ounces of gold from 705,000 tonnes of ore at a recovered grade of 22.6 g/t gold (MIM Holdings Limited – Annual Reports). This makes it one of the highest grade gold deposits in Australia’s recent gold producing history.
Previous mining at Tick Hill was by an open pit with an underground mine beneath the open pit. Access to the underground mine was via a decline. A blind-bored vertical shaft which connected to the decline at depth was used for ventilation and as a mine escape route. Both the decline and vertical shaft were capped by concrete at the completion of mining but both are expected to be recoverable if required for further mining. Mine workings are currently flooded.
The prime purpose of the exploration program to be completed by SPQ is to define a high-grade gold resource similar to that previously mined by Carpentaria Gold Pty Ltd. SPQ has identified a fault near the bottom of the previously mined gold shoot with the possibility that the gold shoot may exist at depth in an offset position from the previously mined area. SPQ will initially drill areas containing the possible offset extension of the mined shoot.