The tenement, which includes the Eureka and Tubal Cain deposit, is considered to be one of the largest goldfields in Victoria, with past production exceeding 4 million ounces of gold.
The deal between the two companies – subject to satisfying a number of conditions and a Ministerial approval – will see A1 execute a $50,000 cash payment and issue 7,816,285 fully paid ordinary shares to Orion, valued at approximately $300,000.
In addition, Orion will be entitled to a 2$ royalty on net smelter returns from the sale of gold recovered and sold by A1 to a value of $500,000.
A1 has also granted Orion a put option whereby Orion can, at any time following a period of 36 months from the date of the Term Sheet, require A1 to purchase the net smelter royalty at a price equal to $500,000 less any royalty paid in accordance with the Term Sheet.
Before closing the deal, A1 will need to replace the $180,000 rehabilitation bond that Orion has on deposit with the Victorian Department of Economic Development, Jobs, Transport and Resources.
A1 said in a statement to the ASX that it plans to develop and mine narrow-vein high-grade gold at the Eureka Deposit for processing at its 150,000tpa Maldon gold processing facility.
The ore will supplement the stockwork ore from the A1 Gold Mine near Woods Point that is expected to commence production later this year.
“The acquisition of Eureka and Tubal Cain deposits at Walhalla helps meet our objective of developing a long-term and sustainable gold mining operation in Victoria,” said A1 Managing Director Dennis Clark.
“We now have over 500,000 ounces of gold resources within viable cartage distance of our Maldon mill and expect that narrow-vein high-grade gold mined from Walhalla Goldfield will supplement ore currently being mined at the A1 Gold Mine, near Woods Point, and the Union Hill Mine at Maldon.”