Great Boulder Resources (ASX:GBR) has agreed to fully acquire the Peak Hill Gold Project from Aragon Resources, a wholly owned subsidiary of Westgold Resources (ASX:WGX).
The terms of the agreement include a mix of a deposit, cash consideration, and share consideration. Under the deal, 391.7 million fully paid ordinary shares in Great Boulder will be issued to Westgold, giving it 19.9% of shares on issue in Great Boulder post-placement completion.
The total cash consideration is $25 million, with a $1 million deposit paid and the balance payable upon completion.
A net smelter return royalty interest of 1% on the production of gold from the project will also be granted to Westgold upon completion. Westgold will also gain the right to nominate a board representative to the Great Boulder board.
Great Boulder notes that the acquisition provides a “material uplift” in its gold resource inventory and provides a pathway to “capital-light production in the near-term”.
Great Boulder Managing Director Andrew Paterson says that the acquisition is “hugely transformational” for the company with its direct path to production.
Alongside the acquisition, the company is undertaking a placement in which it is seeking firm commitments from institutional investors to raise $40 million in a two-tranche placement at $0.085 per share.
“Following completion of the acquisition and completion of the placement, we will be well funded with $25 million cash at bank, and the next 6-12 months will be milestone-rich as we execute aggressive drilling campaigns (with up to six rigs planned, across Peak Hill and Side Well, for 60,000m of drilling) and progress pre-production activities,” Paterson says.
“We aim to have an updated mineral resource estimate in respect of Peak Hill within six months and to advance down the pathway to capital-light production, all the while potentially fast-tracking Side Well in strategic collaboration with Westgold towards capital-light production.”
Strategic acquisition of Peak Hill
The Peak Hill project is located in the Northern Murchison Goldfields of Western Australia, within trucking distance of multiple processing facilities and only 100km from Great Boulder’s Side Well Gold Project.
The project comprises seven granted mining leases, one granted exploration licence, and seven miscellaneous licences for infrastructure, with a total mining tenure of 106km2.
The gold mineralisation at Peak Hill is currently hosted within five main deposits, hosting a JORC 2012 Mineral Resource Estimate of 9.4 million tonnes @ 1.6 grams per tonne gold for 481,000 ounces of contained gold.
Great Boulder believes that Peak Hill is extremely prospective and offers the potential to increase the known gold endowment for the company with near-mine and brownfields exploration opportunities.
Great Boulder plans to complete a combined 60,000m, multi-rig drilling campaign at both Peak Hill and Side Well in the coming six months, with the aim of having Peak Hill ready for mining under the ore purchase agreement within 12 months.
Great Boulder Resources is an exploration company with gold and base metals projects in Western Australia.
Write to Amy Rotman at Mining.com.au
Images: Great Boulder Resources
