$1 Million investment in Ausgold to finance the Katanning Gold Project

Chalice Gold has agreed to purchase $1 million worth of shares in Ausgold that will be used to finance the Katanning Gold Project.

The Ausgold Katanning Project is about 35km north-east of Katanning.

Ausgold acquired the project in 2011 and has conducted multiple drilling and development, the most recent occurring in 2015.

Chalice Gold managing director Tim Goyder said the share placement would provide Chalice with exposure to a relatively advanced, low-risk, open-pit gold mine in WA.

“Given the rarity of undeveloped gold projects in Western Australia — Ausgold’s large tenement package and the strong Australian dollar gold price — we believe there is potential for considerable upside,” Mr Goyder said.

In addition, Ausgold has also agreed to purchase the Dumbleyung Gold project from Chalice for 15 million shares and 10 million unlisted shares that are exercisable at 3.5 cents.

Dumbleyung Gold project covers an area of 461sqkm adjacent to the Katanning Gold project. Ausgold said the result of early stage work on Dumbleyung was encouraging and shows high potential.

However, the purchase of this site is still subject to Ausgold shareholder approval.

Dumbleyung shire president Gordon Davidson said there was no official statement given to the Shire to confirm if the gold project would be up and running soon. “The last time I heard about the project was four years ago,” he said.

“They were still exploring the site and since the level of gold was not high enough at the time and the gold prices was too low, they didn’t really proceed with the project.”

The Katanning Gold Project lies within the under-explored greenstone belt in the South West and was discovered by Otter Exploration in 1979.