Kalamazoo Resources (ASX:KZR) is anticipating receiving an additional $30 million in cash or De Grey Mining (ASX:DEG) shares, if De Grey exercises the option to acquire the Ashburton Gold Project in Western Australia.
De Grey has completed site-based due diligence activities and now expects camp demobilisation by the end of this month, which Kalamazoo CEO Luke Mortimer says is a key milestone of the due diligence process.
On 5 February 2024, De Grey Mining signed an exclusive option agreement with Kalamazoo to acquire the Ashburton Project.
If the option is exercised, the $30 million will be received in two tranches, with the first $15 million payment being received upon exercise of the option. The other half will be received within 18 months of the option being exercised.
Mortimer says De Grey exercising the option to acquire Ashburton “should result in a significant re-rating of our company and enhance its future prospects”.
“De Grey has exclusivity for 12 months until 4 February 2025, with the right to extend for a further six months to exercise the option, and the completion of its site-based activities is a significant step forward in this assessment process,” Mortimer says.
Between now and 31 October 2024, De Grey will continue collecting photographic data of historical drill core stored onsite and will complete the relogging of high-priority drillholes through the centre of the Mt Olympus deposit.
Earthworks and rehabilitation activities are expected to also be completed by the end of this month.
The company adds in relation to De Grey’s metallurgical drilling program, sample geochemical analyses are progressing and initial metallurgical sample compositing has begun.
Metallurgical testwork will be ongoing for the next few months. To date, De Grey has collected 90 historical reverse circulation drillholes for hyperspectral mineral analyses.
Ahsburton comprises granted mining leases and exploration licences, including an existing 1.44 million ounce gold resource. The project, which covers 217km2, lies 35km from Paraburdoo and 290km south of De Grey’s Hemi Gold Project.
Kalamazoo, which has a market capitalisation of $17 million, is a gold and base metals explorer with assets in the central Victorian Goldfields, Pilbara and Murchison regions of Western Australia.
Write to Aaliyah Rogan at Mining.com.au
Images: Kalamazoo Resources
