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(Sharecast News) - Power Metal announced the start of a new joint venture with Red Rock Resources on Wednesday, to build a strategic gold exploration portfolio in Australia.
The AIM-traded firm said it would pay license application expenses to date amounting to AUD $2,159 (?1,125) to become a 49.9% shareholder in Red Rock Australasia - a wholly-owned and currently non-operating exploration subsidiary of the London-listed Red Rock Resources.
It said that the company, or 'ProjectCo', would be renamed to reflect the new business identity, and could acquire further high-profile gold exploration and development projects in Australia.
ProjectCo had submitted an application for exploration license area EL007271, of around 130 square kilometres, in the state of Victoria.
The new licence application is located in the south-western portion of the Victoria Goldfields, 120 kilometres northwest of Melbourne and adjacent to the producing Ballarat gold mine owned and operated by Castlemaine Goldfields - a wholly-owned subsidiary of Singapore-based Liongold - and to the north of the Ballarat mine at Creswick, which features tenements owned by ECR Minerals.
It said the Ballarat mine was currently producing 40,000 ounces of gold per year at an average grade of 5.6 grams of gold per tonne from underground mining, and had historically produced more than 13 million ounces of gold, primarily derived from alluvial mines.
The Ballarat area produced over 160 tonnes of gold between 1851 and 1917, being 88 tonnes alluvial and 72 tonnes hard rock gold, and within that, Ballarat East produced 47 tonnes at 10 grams of gold per tonne between 1857 and 1917.
Power Metal said Ballarat East mining took place along a 16 kilometre, 800 metre wide north-northeast trend from Black Hill in the north to Buningong in the south, with the application covering the southern extension along strike of that trend.
The former EL 4996 tenement - the boundaries of which the current license application follows with limited amendments - had historically produced 112,055 ounces gold, being 102,641 ounces alluvial and 9,444 ounces hard rock, from shallow mining.
Power Metal's chief executive officer Paul Johnson would join the board of ProjectCo, and both Power Metal and Red Rock would be joint operators of the Blue Whale project, contributing to the funding requirements in line with shareholdings.
"This strategic move into Australian gold exploration is an important step for Power Metal, complementing our African base metal interests and providing portfolio diversification by commodity and jurisdiction," said chief executive officer Paul Johnson.
"Australian gold exploration and development projects are attracting considerable interest especially in the Victorian goldfields following the remarkable discoveries at depth at the Fosterville mine, where in the first quarter of 2020 Kirkland Lake produced 159,864 ounces of gold at 42.4 grams per tonne."
Johnson said historic mining in the Victoria Goldfields had been alluvial or at shallow depths, had been underexplored in modern times.
"Simultaneously with the launch of this Joint Venture, we have been able to lodge an application for an exploration licence forming the Blue Whale project near to the producing Ballarat gold mine in Victoria.
"The Blue Whale project is the company's first project in Australia, and opens the door for the potential establishment of an Australian gold portfolio.
"In this regard, we expect to provide further updates on Blue Whale and additional opportunities in the near future."
At 1619 BST, shares in Power Metal Resources were up 13.21% at 0.3p.
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