Southern Pacific Petroleum turns to gold in Chile to ignite shares

Southern Pacific Petroleum (ASX: SPP) has entered into a deal to acquire 100% of Laguna Resources Limited in Chile.

Laguna has an option sales agreement to acquire the Arqueros Gold/Silver Project from Anglo American Norte S.A in the northern part of the Maricunga gold belt of the Atacama Region of Chile.

The purchase price of the option is the amount of US$2,300,000 plus a Net Smelter Return or minimum royalty which will be paid in installments. The consideration is to be satisfied by SPP issuing a total of 250,000,000 ordinary shares and 100,000,000 options exercisable at 1 cent on or before 31 December 2010.

SPP proposes to make a placement of 15% of its capital being 61,250,000 at 0.6 cents per share to raise $367,500. Following completion of the proposed transaction and placement, SPP will undertake a non renounceable entitlement issue to shareholders to raise between $900,000 and $1,200,000.

The Maricunga gold belt is a world class gold province with several multi million ounce gold deposits. The Company's exploration target for the Arqueros Project is 1 to 2 Moz of gold equivalent. This is based on a target range of 20‐40 million tonnes with a grade of 1.5 – 2.0 g/t gold equivalent.

The potential quantity and grade is conceptual in nature. There has been insufficient compilation of previous exploration and mining activity to define a Mineral Resource under the JORC Code.

The Arqueros Project was mined underground on two levels from 2000 to 2004 by Chilean company Minera Can Can.

Approximately 250,000 oz gold equivalent from 1.2 million tonnes of ore was produced during this period. The ore processed had an average grade of 1.34 g/t gold and 364 g/t silver, using a 4.5 g/t gold equivalent cut off.

In 2008, the district produced approximately 450,000 oz gold equivalent from two mines, Maricunga (formerly Refugio) and La Coipa, both operated by Kinross Gold Corporation.

Interestingly, several large scale feasibility level gold projects in the district are in progress, including Cerro Casale (23 Moz gold, Barrick/Kinross), Marte‐Lobo (6 Moz gold, Kinross) and Volcan (7 Moz gold, Andina MInerals).

Mr Matthew Wood will be appointed as Chairman and Dr Nick Lindsay will be appointed as Managing Director.

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