A letter-of-intent agreement sets the stage for Rift Resources (RIF-V) to acquire the Adi Nefas gold and polymetallic massive sulphide deposits near Asmara in the East African nation of Eritrea.
Subject to regulatory approvals, the Toronto-based company has agreed to acquire the project from Paris-based La Source for work commitments of US$500,000 (by April of 1999) and US$200,000 worth of its shares at a price of 25 cents per share, together with a share purchase warrant.
Adi Nefas is reported to host two partially defined deposits: the Adi Negas Doop shear-hosted gold deposit, which contains a resource of 3.5 million tonnes grading 3.2 grams gold per tonne; and the adjacent Adi Negas polymetallic VMS deposit, which contains about 1.2 million tonnes of 11.5% zinc, 1.1% copper, 4.37 grams gold and 165 grams silver. Both deposits are open at depth and/or along strike.
La Source has tested the Adi Nefas gold deposit by 6,522 metres of reverse-circulation drilling in 78 holes and 462 metres of diamond drilling in five holes along a strike length of 1,600 metres.
Highlights from this work include 26 metres of 4.7 grams gold, 28 metres of 3.5 grams, 38 metres of 4.8 grams and 38 metres of 7 grams in the North Block, and 12 metres of 6 grams and 24 metres of 5.2 grams in the South Block.
An Eritrean company tested the Adi Nefas massive sulphide deposit with 22 holes in the early 1970s. Ground geophysical surveys suggest the zone extends up to 2,00 metres northeast of a small, surface gossan.
A program of drilling and additional geophysics will attempt to add to the resource base and upgrade resources to the status of reserves. Rift views both deposits as having potential for near-term production. The company will have three years to complete a bankable feasibility study, at which point it would be able to acquire the project by paying US$600,000 to La Source.
La Source will retain a 2.5% net smelter return royalty, subject to a maximum payout of US$550,000.
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