Comet Resources Ltd (ASX:CRL) has provided an update on its due diligence relating to the binding heads of agreement (HOA) with privately owned El Alamo Resources Limited (EARL) for the proposed acquisition of the Santa Teresa Gold Project.

This includes the concurrently executed non-binding term sheet with Raptor Capital International Limited for gold streaming and royalty financing to fund activities at the project for up to US$20 million (initial minimum of US$6 million).

The high-grade Santa Teresa Gold Project is comprised of two mineral claims totalling 202 hectares located in the gold-rich El Alamo district, immediately to the south of the town of El Alamo, approximately 100 kilometres south-east of Ensenada, Baja California, Mexico.

The project is prospective for high-grade gold, with an existing Inferred Resource of 64,000 ounces gold at an average grade of 8.7g/t, reported at a cut-off grade of 4 g/t (foreign resource estimate).

Commenting on recent developments, Comet managing director Matthew O’Kane said, “Over the last four weeks since we announced the signing of the HoA for the Santa Teresa Gold Project and Raptor financing, we have been working hard on advancing the due diligence work streams with a view to completing them as soon as possible.

‘’I am focused on completing all required work in the September quarter and I am looking forward to finalising the transaction in what is shaping up to be a very interesting gold market in the second half of this year.

‘’Comet is in discussions with professional mining consultancy firms with resources in-country, who will be able to manage the company’s planned work programs following completion of the acquisition.”

Agreement regarding deemed issue price of shares to be issued

The acquisition will be completed on a staged basis, with Comet acquiring a 50% interest upon satisfaction of due diligence and the initial US$6 million financing being made available to the company, with the remaining 50% interest to be acquired upon a decision to mine.

Since Comet’s initial announcement of the acquisition, the company has agreed that the deemed issue price of shares as consideration for the acquisition will be $0.025 per share for the company’s acquisition of the first 50% interest in the project.

The deemed issue price of shares for the second 50% interest will be equal to the volume weighted average price of shares over the 20 days prior to the date of issue of the shares.

With gold just yesterday hitting decade highs of around US$1800 per ounce and the prospect of it moving even higher due to safe haven buying in an unpredictable economic environment, management is keen to progress the project, particularly given historical drilling has proven that there is a strong likelihood of identifying high-grade targets.