ASX-listed Aurumin will focus its full attention on its flagship Sandstone gold project in WA’s Mid West region after completing the last of its strategic divestments near Southern Cross in a deal with Kula Gold.
The company has entered into a binding term sheet for Kula to acquire an initial 51 per cent interest in the Mt Palmer project about 40km east of Southern Cross for $250,000 in cash or shares. Kula can earn an additional 29 per cent interest by outlaying $1 million in exploration expenditure in three years.
Aurumin’s growing focus on its Sandstone asset is unsurprising, especially given its revelations just two days ago of a bonanza-grade gold hit of 1m going 344 grams per tonne from 43m from a reverse-circulation (RC) campaign.
The drilling program has been designed to test seven target areas, with the highlight hit coming from the appropriately-named “Plum Pudding” target. It was part of a longer intercept of 18m going 25.8g/t gold from 30m.
Late last November, Aurumin completed the sale of 13 of its Mt Dimer tenements to Beacon Minerals for $3 million as part of its mission to chip away at an overhanging $6.4 million debt relating to its Sandstone acquisition the previous year. Early the following month, it confirmed it was primed and ready to get back to the drill rig at Sandstone after closing out on the final $1.07 million owing on the convertible note.
And the deal with Kula will only sharpen its Sandstone strategy.
After the initial three-year period of the agreement, exploration spending will be on a pro rata basis or until Aurumin dilutes its share. If Aurumin’s equity reduces to less than 10 per cent, its position will be converted to a 1 per cent net smelter royalty.
If Kula elects to not proceed with the second-stage earn-in, or does not satisfy the exploration conditions, the seller will be able to purchase back a 2 per cent joint venture (JV) percentage share in the tenements for just $1.
Mt Palmer delivered more than 150,000 gold ounces at a respectable 15.9g/t in the decade before it was closed in 1944 due to labour shortage with the continuation of the second World War.
Aurumin managing director Brad Valiukas said: “Subject to successful completions, Aurumin will be positioned with a 20% interest in the Mt Palmer JV, a royalty on the Mt Dimer mining tenements for gold and silver with Beacon Minerals and the potential future royalty on the Mt Dimer exploration tenements with MinRes. There still remains significant potential at Mt Palmer, and we look forward to our continuing participation as Kula gives the project the attention it deserves.”
Valiukas was adamant the company’s focus was now firmly on Sandstone and generating the critical mass required for future production.
The Sandstone project area lies 520km north-east of Perth and is centred on the Murchison area town of the same name. It contains an estimated mineral resource of 881,000 ounces of gold and is part of Aurumin’s greater Sandstone operations that include its Birrigrin and Johnson Range projects, bringing the company’s total gold inventory to just under the “magic million” at 946,000 ounces.
Last month, the company revealed it had picked up five new exploration tenements to build on the Sandstone operation. They sit on more than 60 square kilometres of the Youanmi terrane greenstone and consist of various historical workings and old deposits that make up a slew of compelling targets.
Two tenements lie south of Central Sandstone, with one featuring the promising Good Hope deposit where 29 tonnes mined in the early 1900s returned a stellar 23.17g/t gold. The company says the key terms in acquiring the additional Sandstone tenements from a syndicate of private holders include a $130,000 cash payment, in addition to 4.5 million of its shares at a deemed issue price of 4c.
With a cash or share boost coming from the latest deal with Kula and the retention of a healthy level of interest in Mt Palmer, Aurumin can now continue its exploration blitz at Sandstone – and it appears primed to soon take the site’s resource past the magical million-ounce milestone.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Michael Philipps
