Highlights

Prairie Downs Metals Limited (“Prairie” or “the Company”) is pleased to announce:

• Prairie will be issued 5 million ordinary shares and 5 million options in Colonial Resources Limited (ASX:CLN) (“Colonial”) for successfully identifying and negotiating Colonial’s acquisition of certain West African Gold Projects. The options will have an exercise price of 15 cents and expire on 31 December 2011.

• The successful extension for a period of two years of Prairie’s Exploration Licence No. 52/1758. This is the licence for the principal tenement that contains the Prairie Downs Base Metal Project.

• The on-time and on-budget completion of the extensive geochemistry soil sampling program which constitutes the first step in the Company’s revised base metal exploration strategy. 

• Change of Registered Address and principal Place of Business.

Prairie to be issued equity interest in Colonial Resources Ltd

Colonial has today announced it has entered into a Sale of Shares Agreement for the acquisition of West African Gold Projects owned by Central African Gold plc (“CAG”).

Prairie will receive a fee, subject to necessary shareholder approvals, of 5 million ordinary shares in Colonial and 5 million options in Colonial with an exercise price of 15 cents and expiring on 31 December 2011 for identifying, negotiating, and nominating Colonial as the successful purchaser.

Prairie initially identified the opportunity to acquire from CAG their 80% equity interests in each of Mali Goldfields SARL (“Mali Goldfields”) and Songhoï Resources SARL (“Songhoi Resources”)(collectively referred to as “Malian Assets”).

The Malian Assets consist of early stage gold exploration assets, consisting of 18 prospecting authorizations and research permits spanning circa 1883km². The assets are located within the Kedougou-Kenieba window, a major Lower Proterozoic Birimian outlier on the NE margin of the West African Shield.
After conducting initial due diligence including a site visit and technical review and commissioning an independent economic analysis conducted by Optimum Capital Pty Ltd, Prairie’s assessment of the Malian Assets was that the assets had substantial exploration upside and were best suited to a single focus company and required significant commitment. On this basis Prairie decided not to acquire the Malian Assets in its own right and to investigate the market potential of leveraging the completed due diligence and transaction opportunity for the benefit of the Company.

Prairie conducted detailed negotiations with CAG and submitted a formal offer to CAG for the purchase of the Mali Assets. The terms and conditions contained in this offer, including a total purchase price of US$5 million and Prairie’s ability to nominate the Purchaser, were subsequently accepted by CAG.

Prairie subsequently negotiated an agreement with Colonial that outlined the terms upon which Prairie agreed to nominate Colonial as the Purchaser of the Malian Assets. The key terms of the agreement between Prairie and Colonial are:

• Prairie to nominate Colonial as the purchaser in the purchase agreement successfully negotiated with CAG and use all reasonable endeavours to keep open the opportunity for Colonial to enter into such an agreement;

• Colonial to assume responsibility for paying the all payments due under the purchase agreement;

• Colonial, subject to any necessary Shareholder approvals, will at completion of the transaction issue to Prairie:

 - 5 million ordinary fully paid shares in Colonial;
 - 5 million 15 cent options in Colonial expiring 31 December 2011;

• Colonial, subject to execution of the purchase agreement, to assume responsibility for the payment of certain services provided during due diligence by Blakiston & Crabb, and Optimum Capital Pty Ltd;

• Prairie to disclose to Colonial all technical, legal, tax and other material information that Prairie gained from its due diligence enquiries in relation to the Mali assets and, as required by Colonial, make its services available to Colonial to assist with the transfer of information regarding the relevant CAG assets.

Project Acquisition Strategy

The Company continues to actively seeking new assets to complement our current portfolio and capabilities. Prairie has developed an efficient project identification and due diligence function. Management is continually reviewing new investment opportunities designed to complement existing assets and deliver long-term growth to shareholders.

Prairie Downs Base Metals Project

Extension of Exploration License E52/1758

The Department of Mines and Petroleum of the Government of Western Australia has advised that the extension requested by Prairie of Exploration License E52/1758 has been granted for a further period of two years. Accordingly, the term of the license has been extended to 9th December 2011.  This exploration license is the principle tenement containing the Prairie Downs Base Metal Project. It was noted by the Company’s tenement manager, Austwide Mining Title Management Pty Ltd, that the determination by the Department was one of the quickest they have seen and can be credited to the quality of the Company’s supporting statement. The granting of the extension is an endorsement of Prairie’s revised exploration strategy and commitment to the development of the Prairie Downs Base Metal Project. The company is now exempt from any reduction in tenure for the extended term of the license. This will allow Prairie the opportunity to revise the Company’s previous mining lease application to incorporate an expected larger resource base and footprint. The Company’s base metal exploration strategy is focused on significantly adding to the Company’s current resource inventory and has two primary elements.  The first is the identification of new potential near surface ore positions along strike from the known deposit.  The second is the identification of the possible deeper source of the high grade vein style near surface mineralisation.

Completion of Geochemistry Soil Sampling Program

The comprehensive soil sampling programme that commenced in November has been completed on-time and on-budget prior to closing the site camp for the Christmas break. The primary purpose of the survey is to identify potential strike extensions to the existing base metal system. The data will be used to generate better defined base metal drill targets along and adjacent to the Prairie Downs Fault.

Figure 1: Prairie Downs Base Metal Project – Soil Geochemistry 

Please click the image to enlarge

The sampling grid comprised 400m spaced lines, with 100m spaced sample points, totalling approximately 900 samples. The survey represents the first time the total length of the Prairie Downs Fault has been sampled and will significantly add to the Company’s database of the potentially fertile source stratigraphy. The soil anomalies may represent local host structures on the margin of the Proterozoic basin which promote the mineralisation to the peneplain.

Previous surveys (shown above in Figure 1) comprised short, close spaced lines of 360m length, oriented perpendicular to the fault, and covers the mineralisation at the main resource area. Elements assessed were Zn, Pb and Cu. Anomalies of similar dimensions and higher tenor to the resource area were identified west of the deposit.

The legacy soil geochemistry data identified four significant base metal in-soil anomalies in addition to the main load area, demonstrating the effectiveness of the technique in the regolith regime of the project and, offering potentially the most effective rapid targeting tool for the system. Further to reassessing historic surveys, the current survey will provide a framework for further ranking of targets for drill testing outside previously tested stratigraphy.

The collected samples of the current program have been submitted to ALS laboratories for analysis utilising high resolution methods and providing a broad suite of elements covering base metals, precious metals and pathfinder elements. The samples were submitted in batches with first results due early in the New Year. It is expected the results of the program will be available for release in the December Quarterly Activities Report.

Change of Registered Address and Principal Place of Business

Effective 21^st December 2009 the registered office and principal place of business of Prairie will change to:

Level 21
Allendale Square
77 St Georges Terrace
Perth 6000
Western Australia

Tel: (+61 8) 9225 5755
Fax: (+61 8) 9225 4599

 

John Welborn
Managing Director

For further information contact:
John Welborn
Managing Director
Prairie Downs Metals Limited
Tel: (+61 8) 9225 5755 
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Information in this release that relates to Exploration Results or Mineral Resources is based on information compiled by Mr Luke Kerr     who is a member of The Australasian Institute of Mining and Metallurgy. Mr Kerr has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Kerr consents to the inclusion in this report of the statements based on their information in the form and context in which it appears.