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ASX CHN: $0.17 - 0% | TSX CXN: $0.15 - 11.538%

East Cadillac Gold Project

Location Val-d’Or Gold District, Quebec, Canada
Development Stage Advanced Exploration
Acquired 2016
Ownership Sold to O3 Mining in July 2019
Project Area 293km²
Resources (JORC 2012) Nordeau West: Measured and Indicated Resource of 226,000t @ 4.19g/t Au. Inferred Resource of 1,271,900t @ 4.14g/t Au

LOCATION

The East Cadillac Gold Project covers an area of 293km2 and is located ~35km east of the >20Moz Val-d’Or gold district in Quebec, Canada.  The Project lies within the prolific Abitibi greenstone belt, a globally significant district with a known gold endowment of >210Moz.

The area encompasses a strike length of 27km of the Larder Lake-Cadillac Fault, the most prolifically endowed gold trend in the southern Abitibi.

The Project is along strike from several major mines including Canadian Malartic (>16Moz Au Agnico Eagle and Yamana) and Sigma Lamaque (>11Moz Au Eldorado Gold). The Project surrounds the historical Chimo gold mine, owned by Cartier Resources (TSX: ECR – 17% owned by Agnico Eagle), which produced ~379koz @ 4.8g/t Au (Figure 1 and 2).

East Cadillac has all season access and world class infrastructure including road, rail and power. Quebec is a mining friendly jurisdiction with no state royalty and a 30% exploration rebate. 

THE OPPORTUNITY

Acquired in late 2016, the Project was a consolidation of several earn-in option agreements (Chalice earning 80 to 100%) and Chalice’s 100%-owned claims. Previously segmented ownership hindered any modern regional exploration being applied effectively, meaning the Project is underexplored relative to the remainder of the LLCF trend.

In July 2019, Chalice entered into a share purchase agreement to sell its East Cadillac and Kinebik Gold Projects in Quebec to O3 Mining Inc. for C$12 million in shares plus a 1.0% NSR royalty over 577 claims. The sale allows Chalice to maintain upside exposure to the Val-d’Or gold district and to focus on its high profile portfolio of opportunities in Australia.

O3 Mining is a new Osisko Mining Inc. (TSX: OSK) led venture, with a portfolio of resource stage gold projects and significant exploration potential in the Val-d’Or district. Osisko Mining is a leading Canadian gold exploration and development company based in Quebec, Canada. The company currently has a market capitalisation of ~C$880 million. 

For the latest information please refer to our Investor Presentation and ASX Announcements.

 

EXPLORATION

Since acquiring the Project, Chalice completed systematic geochemistry and geophysics field programmes, targeting a multi-million ounce gold discovery. This work has generated 7 new, largescale targets. Chalice drilled ~35,000m on the Project, testing 5 of these new targets resulting in 3 new wide-open gold discoveries. Drilling also expanded two existing advanced prospects along strike and down plunge. 

 

SALE TERMS

Under the Share Purchase Agreement, Chalice will sell all outstanding shares in its wholly owned subsidiary CGMQ, to O3 Mining. Chalice will receive 3,092,784 common shares of O3 Mining, at a deemed value of C$3.88 per common share, for a total of C$12 million in consideration.

In accordance with the restrictions under Canadian securities laws and subject to certain exceptions, Chalice will be restricted from trading these shares for a period of four months from the date of issuance. Following closing of the transaction, Chalice expects to hold approximately 7% of the issued shares of O3 Mining, while Osisko Mining is expected to hold approximately 59%.

In addition, Chalice will retain a 1.0% NSR royalty on all 100% owned claims on both projects that are not subject to a pre-existing royalty (577 claims). CGMQ currently has approximately C$1.3 million in tax credits in its accounts receivable and, under the SPA, O3 Mining will reimburse Chalice any amounts received in cash upon receipt (expected in late 2019), provided that such amounts are received from Canadian tax authorities within 2 years of closing.

Completion under the SPA remains subject to the satisfaction (or where permitted, waiver) of a number of conditions precedent, including: 

  • Completion of the Osisko Transaction and the release from escrow of the net proceeds of the Placement;
  • Receipt of all necessary authorisations, approvals and consents required by both parties (which may include shareholder approval by Chalice in accordance with ASX Listing Rule 11.4, if required);
  • No material adverse change occurring with respect to CGMQ; and
  • Additional customary conditions precedent regarding representations and warranties remaining true and correct and no restriction on completion as a result of any legal requirement, judgement or litigation. The conditions precedent must be satisfied (or where permitted, waived) by no later than end September 2019. Completion is anticipated to occur in early Q3 2019.

 

Please refer to ASX AnnouncementSale of Quebec gold projects for C$12 million plus royalty – 3 July 2019 for full details.

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