Oakdale Resources Ltd. signed a binding term sheet to acquire the Burpar gold project for US$15,000 in Peru as part of a strategy to potentially expand further in the country or provide cash to help progress its namesake Oakdale graphite project in South Australia.

Burpar will provide feed for a gold processing plant in Peru that the company signed a term sheet to acquire in November 2018.

Oakdale Executive General Manager Andy Knowles said that with the gold processing plant deal ratified March 6, the company will now focus on increasing the capacity of the plant at Chala from about 25 tonnes per day to 40 tonnes per day. Recommissioning will be completed by the end of the year. Oakdale will then take capacity up to 120 tonnes per day in June 2020.

The company said in a May 8 statement that while Burpar, which incorporates the Rio De Dios and the Hanai gold mine prospects in southern Peru, already has extensive pits close to surface, no geophysical surveys, systematic geochemical sampling or drilling has been done.

However, gold assays over 117 g/t were reported in a selection of sampled veins from Rio De Dios, and Hanai's mineralized structures are developed for at least 500 meters in length and interpreted to have a range of mineralized ore shoots at depth. Oakdale said this gives the project "significant scale and potential."

The company also cited reports by state-owned Centromin that suggest that many other types of additional exploration targets exist within the leases. These include several epithermal prospects equivalent in age and chemistry to the host units of many of Peru's large open pit gold mines.

Knowles, who was CEO of the company that owns the Peruvian gold plant, estimates that expanding Oakdale's Ozinca gold plant to 120 tonnes per day will generate about US$450,000 per month.

Once the expanded plant starts generating that cash flow, Knowles said in an interview that Oakdale would look at replicating the model elsewhere in Peru and potentially become more active at its graphite project in South Australia's Eyre Peninsula, where it also has base metals mineralization potential and an iron project.

"The problem with Peruvian mining is there are so many little artisanal operations that can't legally process the ore, so there's a shortage of processing facilities, and the government is very supportive of companies like ours to build them and help process the small amounts of gold that individuals have," Knowles said.

Knowles said there could be up to three other areas where Oakdale could replicate the model in Peru, a country that has seen mining investment soar 37.1% to US$1.193 billion in the first quarter over the same period in 2018, according to government figures.

Burpar is in the Caraveli Province in Peru's Arequipa region, which led the country's copper production in March, according to Peru's Energy and Mines Ministry.