Metals X to take stake in Tanami project

Metals X has agreed to acquire a 25 per cent stake in Tanami Gold’s Central Tanami gold project in the Northern Territory for $11 million in cash and 4 million shares.

Under the terms of the deal, Metals X will later earn a further 50 per cent interest in the project by sole funding all expenditure and costs required to bring the project back into commercial production.

Once production is under way, Metals X will be manager and operator of the project and will grant Tanami a six-month period to decide if it wants to sell its remaining 25 per cent stake in the project to Metals X for $32 million in cash or shares.

“The Central Tanami project is an outstanding land package with significant resource base and infrastructure in place,” Metals X chief executive Peter Cook said.

“In particular, the Groundrush ore system is large, high grade with magnificent metrics for underground mining at high production rates and very competitive costs.

“There remains significant plant and infrastructure in place and a rapid re-start of operations is possible.”

The Central Tanami project, located in the Tanami Desert in the Northern Territory, covers a 2.26 square kilometre mining tenure, which has been actively mined in 43 separate open pits from the 1980s until 2004, when it was placed on care and maintenance by Newmont Mining.

Tanami chairman Gerard McMahon said the agreement with Metals X provided the best opportunity for the company.

“Tanami will have the benefit of receiving sufficient cash to pay out existing debts and will be relieved of all obligations for funding exploration and development to commercial production, but will retain 25 per cent of the project thus retaining exposure on the upside,” he said.

Metals X shares were 0.8 per cent lower at $1.20 per share at 10am.