ASX-listed gold explorer Anglo Australian Resources has bought out a couple of legacy third-party royalties that had been hanging over its historic Mandilla gold project 20km south-east of Kambalda in WA.
The Perth-based company has now cleared the decks for a potential mine development as it advances towards a maiden resource estimate for Mandilla in the December quarter.
Anglo issued 1,142,588 of its shares with a nominal value of A$200,000 to knock out one of the royalties and paid US$400,000 cash to remove the other.
The royalties were quite weighty too, one of which was a 4 per cent net smelter royalty on gold production above 100,000oz.
The same royalty would have also seen Anglo pay out 10 per cent of every dollar received over A$600 an ounce for every ounce of gold produced.
A second royalty stream would have cost the company $1 per tonne of gold ore mined and treated.
Anglo Australian Managing Director, Marc Ducler said: “The elimination of all third-party royalties is a pivotal step for us in advancing the exciting Mandilla gold project to the next level and maximising the value of this rapidly growing discovery for our shareholders.
“The agreements we have struck with the royalty owners amount to a transformational development for the company, given our corporate focus on advancing the project as quickly as possible. We can focus on the ongoing drilling programs – which are progressing well and laying the foundations for a maiden mineral resource estimate later this calendar year.”
Ahead of a planned 10,000m RC drilling program set to kick off next month, Anglo Australian recently released encouraging gold hits from a 3,600m diamond drill program probing deep, down-plunge extensions to the known mineralisation.
Notable initial diamond results included 76.5m going 1.21 grams per tonne gold from 296m, including 1.0m at 42.09 g/t from 321.1m and 13.4m at 7.02 g/t from 180.4m, including 0.9m at 87.89 g/t from 185.3m.
These intersections suggest a significant “nugget effect” within the gold mineralisation at the Mandilla East discovery.
There were numerous occurrences of visible gold within the quartz vein zones of the diamond drill core too. The diamond drilling has significantly increased the mineralisation at depth and the mineralised footprint has now more than doubled along strike and remains open, according to Anglo Australian.
It is aiming to get the rods spinning again in September after securing a scarce RC rig with Orlando Drilling. The 10,000m RC drill program is designed to infill the Mandilla East mineralisation to a 40m x 40m drill density over most of the delineated strike extent and test extensions to the Mandilla East and Mandilla South prospects.
The Mandilla project lies in the northern Widgiemooltha greenstone belt, which hosts several nickel and gold deposits. The nearest gold deposit is the historic high-grade Wattle Dam open-pit and underground mine just 3km to the west of Mandilla.
Wattle Dam operated between 2006 and 2012, producing about 286,000oz of gold from 880,000 tonnes or ore grading an impressive 10.1 g/t for owner Ramelius Resources, with most gold production coming from the underground mine that produced 438,000t of ore at 14.9 g/t for about 210,000oz.
Anglo Australian, who has owned the Mandilla project since 2003, produced about 23,000oz of gold in 2006-07 from ore mined at two shallow open pits at Mandilla West averaging a recovered grade of about 7.5 g/t gold. According to management, very little exploration has been undertaken at the project between then and last year.
The company has a few gold processing options up its sleeve given the location of its project is within 50km of several gold treatment plants. Early interpretation and modelling work points to the potential for an initial low-strip ratio open-pit mine development.
All eyes will be on the maiden resource estimate for Mandilla when it is tabled in the coming months and provides a first glimpse of just how big Mandilla might be.
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By Matt Birney
