Japan Gold Corp has concluded an agreement with Sumiko Resources Exploration & Development Co Ltd (SRED) to manage and operate its drilling programs in Japan. To support this contract, Japan Gold has agreed to purchase three diamond core drill rigs that will be operated by SRED.
SRED, founded in 1963, is a wholly-owned subsidiary of Sumitomo Metal Mining Co Ltd, a major non-ferrous metal mining and smelting company based in Japan. SRED offers consulting services for resource exploration and environmental investigation using geological, geophysical exploration and related technologies including drilling.
SRED was instrumental in the prospecting, development and exploitation of the Hishikari mine, Japan’s largest and highest grade operating gold mine.
Japan Gold’s chairman and CEO John Proust said, “We are very pleased to partner with SRED in this new venture. Their experience and reputation in Japan is unsurpassed and will be particularly valuable as we seek to unlock the potential of our large project portfolio. Undoubtedly, this partnership will enhance the capability and credibility of Japan Gold Corp.”
In conjunction with the SRED contract, Japan Gold has agreed to purchase three portable diamond drill rigs from PT Promincon Indonesia (PMC) for $544,000. PMC manufactures a range of portable diamond drill rigs and is an established diamond core drilling contracting company incorporated in Indonesia. A director and officer of Japan Gold has a controlling interest in PMC.
Acquisition of the two PMC400 drill rigs and one PMC700 drill rig will give the company independence and flexibility on the timing and execution of its drill programs. In addition, the company sees cost saving benefits of owning its own drill rigs.
The compact nature of these diamond drill rigs allows for rapid set-up, move and the remediation of drill sites. They also have a smaller environmental footprint when compared to conventional equipment.
The drill rigs have been proven and tested in similar geological environments. The PMC400 and the PMC700 drill rigs can core-drill to depths of over 400 metres and 700 metres in NQ core size respectively.
Meantime, Japan Gold has agreed to the terms of a financing with Southern Arc Minerals, which involves the latter investing $5 million and acquiring 12.5 million shares of Japan Gold. On closing of the placement, Southern Gold will own approximately 53.08% of Japan Gold’s issued and outstanding common shares.
Japan Gold independent director David Farrell said, “Japan Gold is pleased with Southern Arc’s vote of confidence in our strategy to deliver value to all shareholders through both property acquisitions and the drill bit. The pricing of this financing was a key consideration in the independent directors agreeing to this related-party transaction.”
The principal use of proceeds from the placement is intended to fund $3.65 million in exploration expenditures with the remaining $1.35 million allocated for general working capital.