Operating on the ASX with a market capitalisation hovering just above AU $1 million yesterday, microcap explorer Castle Minerals (ASX: CDT) has doubled their share price following the announcement of a US $11.7 million farm-out agreement at their wholly owned projects in Ghana.
The agreement with private Ghana-based company Iguana Resources will provide Iguana with access to Castle’s Degbiwu and Ghiniyiri licenses, both of which have seen little activity since 2014, understandable with Castle reporting just $242,000 of cash reserves last month.
“This US $11.7 million, three staged farm-out deal on the Degbiwu and Gbiniyiri licences with Ghana based Iguana Resources will see an acceleration in exploration activity on these prospective licences and in particular the Kpali target, where Castle has previously outlined an open-ended 107,200oz gold Inferred Mineral Resource, and at the intriguing Bundi gold-zinc prospect,” said Castle Managing Director, Stephen Stone.
The estimated 107,200oz of gold was reported back in 2014 but with the new investment being made by Iguana, the project will be able to progress at their Kpali prospect, one of five covered under the license.
The nearby Bundi prospect has seen 20 drill holes extracted which intersected gold and zinc sulphide mineralisation.
Under the terms of the farm-out agreement, Iguana may earn an initial 51% of the Licenses by funding US $4.72m towards exploration over a three-year period.
That ownership stake can increase to a total of 80% by solely funding an additional $6 million over the next two years.
The Degbiwu license sits adjacent to the WA Gold Project of Azumah Resources (ASX: AZM) which owns a 12.4% interest in the issued capital of Castle, making them the largest shareholder.
Azumah is currently in the process of completing a Feasibility Study for a long-life open pit mine and has reported an Ore Reserve of 1 million ounces of gold.
Iguana has flagged intent to start a 4,600m RC drilling program at Kpali later in 2019 subject to approval from the Government of Ghana.
Shares in Castle Resources closed yesterday at $0.006 and traded as high as $0.016 in early morning trading.