1st Aug 2007 07:02
Medusa Mining Limited01 August 2007 Medusa Mining Limited Heads of Agreement and Investment in Sierra Mining Limited Medusa Mining Limited ("Medusa" or the "Company"), the Australian based companyoperating and developing gold mines in the Philippines, is pleased to advisethat it has signed a Heads of Agreement with Sierra Mining Limited ("Sierra")whereby the Company, after completing satisfactory due diligence, will earn a70% joint venture interest in Exploration Permit application ("EPA") 000037-XIIIand Mineral Production Sharing Agreement application ("APSA") 000003-XIII(together the "Bunawan JV"). This is the last remaining significant parcel covering a total area of 88.8square kilometres (8,800 hectares) which is contiguous to the Company's Co-OProject. Medusa will then control in excess of 800 sq km of tenements along theEast Mindanao Ridge. Upon completion of due diligence and signing of a Joint Venture Agreement ("JVA") between the companies' respective Filipino corporations, Medusa hasagreed to acquire 4.85 million shares in Sierra representing 9.9% of theenlarged share capital. The shares are to be acquired at an issue price ofA$0.25 each, representing a total consideration of A$1.21 million. Medusa hasalso been granted 2.425 million unlisted options over Sierra shares exercisableat A$0.30 each with an expiry date of 4 years from the date of signing of theJVA. Sierra is quoted on the ASX and its shares last traded at A$0.22 per sharegiving the company a market capitalisation of A$10.78 million. The Company is of the opinion that the new parcel of land and investment inSierra will significantly increase its exposure to the highly prospectivegeology of the East Mindanao Ridge, an area with known world class deposits. Sierra also controls three projects totalling 263 square kilometres to the southof the Company's Co-O Project in recognised mineralised areas with known worldclass deposits. These tenements are prospective for porphyry copper deposits andhigh grade gold veins. Sierra also owns two groups of prospects in Papua NewGuinea. Geoffrey Davis, Managing Director of Medusa, commented: "We are very pleased to have concluded this agreement. Following completion,Medusa will have control of the all the tenements adjacent to its Co-O mine.This will allow the Company to evaluate fully an area that we believe to behighly prospective." Joint Venture Terms The key terms of the Heads of Agreement with Sierra are as follows: Medusa has the right to earn a 70% interest by: i) contributing a minimum of USD1,500,000 expenditure on exploration and/or development of the tenements in the Bunawan JV. This amount is to be spent over a period of three years from the date of granting of the necessary permits over the aforementioned Mindanao tenements, ii) after Medusa has earned its 70% interest, Sierra has the right to contribute to ongoing expenditure or dilute to a 3% Net Smelter Royalty; - Medusa is required to spend US$300,000 within 1 year after granting of the tenements; and - Medusa is responsible for all costs incurred to progress the tenements to granting. The Heads of Agreement will be replaced by a Joint Venture Agreement ("JVA")between the parties' respective Filipino entities in the near future. Thisagreement will be subject to the satisfaction of normal due diligenceinvestigations within 30 days of signing the JVA. Sierra's Co-O Area Tenements The Company regards the Bunawan JV tenements as prospective for narrow vein golddeposits and potentially porphyry copper-gold deposits. The geology of thesetenements is described in Sierra's prospectus, which can be viewed onwww.sierramining.com.au. Several areas within Sierra's tenements are currentlysubject to small scale mining activities attesting to the presence of high gradegold mineralisation. No modern exploration has been conducted on the tenements. Sierra's Southern Tenements Sierra's prospectus describes the Ayan, Nabunturan and Bahayan Projects that itowns to the south of the Co-O Project and comprising 263.6 square kilometres oftenements at very prospective locations. The Ayan Project comprises granted Exploration Permit 000001-06-XI andapplications 118 and 131. These are situated predominantly southeast of thelarge undeveloped Kingking porphyry copper deposit (1 billion tonnes at 0.3%copper and 0.4 g/t gold) and with several blocks within close proximity to thesouth side of the Kingking Deposit. The Nabunturan Project is located on the north-western edge of the wellmineralised North Davao Mining District where there has been past productionfrom porphyry copper deposits (including the Amacan Deposit where the remainingresources are 110 million tonnes at 0.3% copper and 0.4 g/t gold) and highgrade, low sulphidation epithermal quartz veins, eg, the Hjio Vein. Themineralisation in this area is associated with a volcanic caldera complex andhot spring activity. The Bahayan Project is contiguous with and on the northwest corner of thegovernment controlled Diwalwal Deposit, which is nearing depletion. It isestimated that the Diwalwal high grade, low sulphidation, epithermal veindeposit has produced in excess of 7 million ounces of gold. Maps and cross sections which accompany this announcement can be viewed in theASX version of the announcement on the Company's website:www.medusamining.com.au The information in the above announcement was compiled by Geoff Davis, who hassufficient experience which is relevant to the style of mineralisation and typeof deposit under consideration and to the activity which he is undertaking toqualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources andOre Reserves". Geoff Davis consents to the inclusion in the report of thematters based on his information in the form and context in which it appears. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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