Commander Resources (CMD, 0.17) has entered into a farm-in agreement with major AngloGold Ashanti, whereby AngloGold must spend $20 million in exploration on CMD's Baffin Island gold project, as well as complete a $1.2 million PP with CMD. 

The Baffin Gold Project is a new gold district in the early stages of exploration and has demonstrated good potential for one or more shallow high grade gold deposits. 

CMD has approx 80 million shares o/s, however following the private placement, they will add 10 million shares to the total outstanding.  No further dilution will be required to finance the Baffin Island project.

Commander, AngloGold enter farm-in for Baffin Island

2009-09-03 15:26 ET - News Release

Mr. Kenneth Leigh reports


Commander Resources Ltd. has signed a farm-in and joint venture agreement with AngloGold Ashanti Limited's subsidiary, AngloGold Ashanti Holdings PLC. Under the agreement, AngloGold may earn a 51-per-cent participating interest in Commander's Baffin Island gold project, Nunavut, by financing $20-million in exploration expenditures and by completing a $1.2-million private placement in the shares of Commander.

Ken Leigh, president and chief executive officer of Commander, states: "We believe this to be the right time for a high-quality partnership with one of the top gold companies in the world. The agreement enables us to rapidly accelerate exploration and development of our Baffin Gold project, which covers a regionally extensive and exciting new gold district in the rapidly developing Nunavut frontier."

The key terms of the farm-in agreement are outlined below.

AngloGold may earn a 51-per-cent participating interest in the property by spending $20-million over a six-year period, including a firm commitment to finance $5.5-million in exploration expenditures within the first two years. The commitment includes completion of a minimum of 3,000 metres of diamond drilling;

Commander will act as project manager for the initial two-year committed program. AngloGold will pay a 10-per-cent management fee to Commander on all project expenditures incurred on the project during that period;

Once AngloGold has vested a 51-per-cent interest in the property, a 51:49 joint venture will be formed. AngloGold may then elect within 60 days of vesting to increase its interest in the property to 70 per cent by sole financing all continuing expenditures to complete a feasibility study within four years on at least one of the prospects on the property.

Private placement

AngloGold has agreed, subject to TSX Venture Exchange approval, to subscribe to units of Commander totalling $1.2-million. Such units will consist of one share plus one-half share purchase warrant. The shares will be priced at 12 cents. One whole warrant will be exercisable to purchase one share of Commander for two years at a price of 24 cents. The proceeds will be used by Commander primarily for working capital and corporate purposes. AngloGold will have the right, subject to TSX Venture Exchange approval, to participate in future private placements in order to maintain its initial equity interest level in Commander under this agreement.

As part of the initial two-year commitment, AngloGold may provide the funds that will allow Commander to exercise its right to accelerate acquisition of ownership of 100 per cent of the Bravo property, which is part of the Baffin gold project.

Commander is currently completing a limited field program to advance the project in the remaining field season and to begin preparation for a full campaign next year. This season's program is focused primarily on expanding the Hebert zone. An aggressive multitarget drill campaign will start in the spring of 2010.

This agreement is subject to approval by the TSX Venture Exchange and the Reserve Bank of South Africa.