De Grey Mining (ASX:DEG) has extended its option period to acquire the Ashburton Gold Project from Kalamazoo Resources (ASX:KZR) by six months, in order to receive the results of a recent metallurgical testing program.
In February 2024, De Grey signed a deal to acquire Ashburton for $33 million, including the existing 1.44-million-ounce gold resource. Ashburton sits near De Grey’s Hemi Gold Project in Western Australia, and $3 million of the acquisition price has already been paid as a non-refundable option fee.
Kalamazoo says De Grey has the option to pay the remaining $30 million in cash or shares — in two $15 million tranches — at any time during the extended option period to acquire the project.
Kalamazoo, which has a market capitalisation of $16.7 million, says the updated option schedule — which is now due to expire on 4 August 2025 — will depend on the timing required to include the metallurgical results in geological resource models and optimisation studies.
Both of these are required to be completed as part of De Grey’s due diligence investigations.
The extension comes after De Grey released assays from its recently completed metallurgical drilling program at Ashburton, which comprised 10 holes for 2,252.3m of drilling.
The drilling program is a key component of De Grey’s due diligence under the acquisition agreement.
The latest results include 47m @ 5.5 grams per tonne (g/t) gold, 55.5m @ 4.1g/t gold, and 4.9m @ 17.1g/t gold.
Kalamazoo CEO Luke Mortimer says these results continue to highlight the exploration upside and economic potential of the project, and also drew attention to the recent announcement that Northern Star Resources (ASX:NST) has agreed to acquire De Grey for roughly $5 billion.
“During the transition period, we will continue to work with De Grey’s exploration and management team as its final Ashburton Gold Project due diligence activities are completed,” Mortimer says.
Kalamazoo Resources is a mineral explorer focused on its portfolio of gold and base metal projects in the central Victorian goldfields.
Write to Aaliyah Rogan at Mining.com.au
Images: Kalamazoo Resources
