Capricorn Metals Ltd (ASX: CMM) has announced that it will acquire the 139km² Mt Gibson Gold Project in a cash and scrip deal worth $39.6 million. The purchase, announced on Wednesday, increases Capricorn’s total gold resources to 4.2 million ounces when combined with the Karlawinda Gold Mine.
Deal fundamentals
Capricorn stated that the transaction represents a “strong value creation opportunity”, with an acquisition cost of less than $20 per resource ounce plus a 1% NSR royalty for gold production exceeding 90,000 ounces.
Consideration for the project is comprised of $25.6 million cash plus $14.0 million via issue of 7.65 million fully-paid ordinary shares in CMM, equal to 2.1% of post-issue capital.
Mount Gibson Gold Project
The Mountt Gibson Gold Project is located ~280 kilometres north-east of Perth in Western Australia’s Murchison region. The project includes 139 km² of tenure, both granted and under application, and in excess of 15 kilometres of strike along the gold-bearing Retaliation Greenstone Belt.
Between 1986 and 1999, the project produced ~868,000 ounces of gold from open pits that reached a maximum depth of 100 metres below surface, with an average depth of 60 metres.
No significant gold exploration has been undertaken since the late 1990’s, with the project placed in care and maintenance when gold prices dropped to AUD$450/oz.
Up next
Capricorn reports that it will begin the technical and environmental studies required to support a reserve estimate, along with a feasibility study on the project in parallel with drilling.
“There is every reason to be optimistic about the opportunity with last gold production over 30 years ago from very shallow open pits when the gold price was around A$450 per ounce”
Management comments
Capricorn Metals Executive Chairman Mark Clark said: “The purchase of the Mt Gibson Gold Project is an outstanding opportunity for Capricorn to grow beyond the now operational Karlawinda project. The project has a proven gold endowment, is located in the world class mining jurisdiction of WA and has been subject to very limited modern exploration.
There is every reason to be optimistic about the opportunity with last gold production over 30 years ago from very shallow open pits when the gold price was around A$450 per ounce. We look forward to undertaking an extensive drilling programme to infill and significantly extend the shallow drilling depths to allow an update to the current 2.1 million ounce resource.”
Images: Capricorn Metals Ltd