Greater Bendigo Gold Mines Ltd (GBM) announced today it has signed an option to purchase the Bendigo Creek Tailings Project at Huntly, approximately 10 kilometres from Bendigo.

The Bendigo Creek Tailings Project which comprises mining licence applications 5512 and 5515 contain drill indicated tailings resources of 1.8 million tonnes, at an average grade of 0.58 g/t giving a contained gold resource of approximately 33,000 oz.

Based on current gold price of about $1500 per ounce, the projected gold value for Bendigo Creek Tailing Project is $50 million.

Under the option agreement, GBM will manage the progress of the project and will fund various assessments and approval processes. GBM will make an informed decision on exercising its option once outcomes of the assessment and approval processes are determined.

Should GBM exercise its option, the gold production and exploration company will acquire Bendigo Creek Tailings Project for a payment of $200,000 and the issuing of 5 million fully paid GBM ordinary shares. GBM also would have an obligation to pay a 7.5 per cent royalty on gold sales.

GBM managing director John Cahill said," "GBM will undertake sensitivity analysis on the project financials as well as engaging related parties to identify all the issues in undertaking this project as part of its option process."

Cahill expressed optimism that the signing of the option will boost the production capabilities of GBM and will yield positive results for the company. He said that the close proximity of Bendigo Creek Tailing project with the other GBM projects makes it "a financially and logistically feasible project."