StrikePoint Gold (TSX-V:SKP) has agreed to acquire the Northumberland Gold Project in Nevada, US, from Newmont (ASX:NEM) for US$70 million ($98.94 million) upfront.
The agreement also provides for two contingent payments of US$25 million each. The first becomes payable after the completion of a Feasibility Study, while the second is tied to commercial production milestones.
Northumberland hosts an initial mineral resource estimate of 2.86 million ounces (Moz) of gold equivalent in the indicated category and 1.57Moz in the inferred category.
The estimate comprises 67 million tonnes (Mt) @ 1.33 grams per tonne gold equivalent in the indicated category and 31Mt @ 1.58g/t in the inferred category.
It was prepared by SLR Consulting from 1,511 reverse circulation and 37 diamond drill holes completed by previous operators. StrikePoint has not conducted exploration or drilling at the project, which has not been explored since about 2010.
The estimate is constrained within an optimised pit shell and uses long-term prices of US$3,500 per ounce for gold and US$55 per ounce for silver. Northumberland currently has no mineral reserves, and its resources do not have demonstrated economic viability.
CEO Michael Allen describes the acquisition as a “transformational step” for StrikePoint.
“We will be focused on unlocking the potential of Northumberland going forward and advancing exploration and development activities at Northumberland,” Allen says.
The past-producing Carlin-style deposit is largely on private land within Nevada’s Walker Lane mineral trend, about 150km by road from Tonopah. It lies roughly 60km north of Kinross Gold’s (TSX:K) Round Mountain Mine.
StrikePoint says five drill permits are in place, subject to transfer or replacement requirements after closing. The deposit remains open in several directions, with near-pit, in-pit, and regional exploration targets identified across the property.
To fund the purchase and advance Northumberland, StrikePoint has entered into an agreement for a C$140 million ($142.34 million) bought-deal financing led by Canaccord Genuity, part of Canaccord Genuity Group (TSX:CF). The financing comprises 70 million subscription receipts priced at C$2 each, with an option to raise another C$21 million.
StrikePoint says it will complete a 10-for-one share consolidation before the acquisition, subject to TSX Venture Exchange approval. The transaction is expected to close around the end of September, with trading in StrikePoint shares expected to remain halted until completion.
StrikePoint also owns the Hercules and Cuprite gold projects in Nevada, with Northumberland set to become its flagship asset if the acquisition closes.
Write to France Pinzon at Mining.com.au
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