Ann: Grant of Mining Lease for Agate Creek Gold Project, page-41

i was holding this since the 1st announcement in 2015 about the deal but i always thought the deal i imagined was too good. And it was. This announcement was the 1st time i noticed clear logical details of the deal. (maybe i previously missed something). the announcement says:

The direct costs incurred with respect to the first 100,000 tonnes of production from to the project including but not limited to mining; transportation crushing and processing of ore; and rehabilitation of the disturbed area, will be incurred and paid for by Maroon.

Gold produced will be paid 60% to Laneway and 40% to Maroon above 3.5 g/t gold head grade with the initial 3.5g/t produced to be retained by Maroon towards the above costs.

Now the JORC of 1 Feb 2016 is 89,000 tonnes at 6g/t grade.

The recent drill holes of 14 Jan 2016 look like they might increase the grade. The average thickness of those drill holes was 2.2 metres and the average grade 24 gram per tonne.

Now the whole Sherwood area around 300m x 120m. If the average thickness was 3 metres, this would come to 300,000 t0nnes; best case (i.e., 300 x 120 x 3 x 2.5 bulk density).

However, the grades are variable and, importantly, the deposit appears to incline to depth, as follows, making the potential mineable tonnage questionable:


So, in summary, say a new JORC manages to find the 1st 100,000 tonnes at 10 grams per tonne. That will be $21M in cash to LNY (no tax payable due to past losses). At 0.6 cents, the market cap including convertible notes is $25M. Plus there was $3M in liabilities at 30/6/18.

If the 1st 100,000 tonnes is 8 grams per tonne, that is $15M in cash to LNY.

Say the tonnage is 150,000 tonnes. On the deal terms, the cash is $22M at 8 g/t and $32M at 10 g/t.

Not much going on here, it seems, unless the gold price spikes due to economic crisis.