Corazon Mining has entered a binding agreement to acquire 100 per cent of Westgold Resources’ Chalice gold project in Western Australia’s Higginsville district. The transformational deal hands Corazon a granted mining lease hosting a high-grade 191,000-ounce gold resource. Backed by a heavily supported A$16.5 million capital raise, the company is launching an immediate 15,000-metre drilling campaign.
In a savvy move, Corazon Mining has locked in a deal to snap up 100 per cent ownership of the high-grade Chalice gold project, 50 kilometres northwest of Norseman, from Westgold Resources.
The transformational acquisition hands the company an established, high-grade gold system sitting on a single granted mining lease within Western Australia’s infrastructure-rich Higginsville district.
In a big show of support, major gold producer Westgold will emerge with a 19.9 per cent strategic stake in Corazon upon completion, potentially forging a powerful foundation for a long-term operational partnership between the two companies.
The new deal is funded by A$8M in cash up front, 47.6M Corazon shares, worth 6.7M, and an additional A$11M in deferred cash payments linked to anniversary and mineral resource expansion milestones.
Corazon says Chalice comes with a solid pedigree, hosting an existing JORC 2012 mineral resource estimate of 191,000 ounces of gold at a grade of 2.74 grams per tonne (g/t). Notably, the last mining at Chalice took place 12 years ago when the prevailing gold price averaged a modest A$1,370 per ounce.
Built using an ultra-conservative gold price assumption of just US$1700 (about A$2383) per ounce, the current Chalice resource could carry substantial hidden upside in today’s booming gold market, where spot prices have rocketed to roughly A$6400 per ounce.
With bullion now trading at nearly three times the price used in the original optimisation work, Corazon believes there is strong potential for rapid resource growth through pit shell expansions, lower cut-off sensitivities and the inclusion of additional ounces that may previously have sat outside economic boundaries.
In its heyday, Chalice produced 517,000 ounces at a hefty 5.6g/t gold from open pits and 39,000 ounces grading 5.5g/t gold from underground operations between 1995 and 1999. A later campaign extracted an additional 89,000 ounces of gold at 4.35g/t between 2011 and 2014.
Historical drill intercepts show that the unmined, high-grade mineralisation remains completely open and untouched by modern exploration.
Previous drill hits include a stellar 35m at 2.5g/t gold from 149m, featuring a richer slice of 15m at 4.1g/t gold from 149m at the Kronos lode.
Deeper target testing also returned 22m clocking 3g/t gold from 524m at the Olympus lode, alongside near-mine hits of 8m at 8.0g/t gold from 18m, and 20m at 2.6g/t gold from 68m at the project’s Atlas lode.
Corazon Mining managing director Simon Coyle said: “The acquisition of the Chalice gold project is a genuinely transformational step for Corazon. Chalice is a proven high grade gold system that has produced nearly 650,000 ounces, and with a resource that remains open in multiple directions.”
Adding to Corazon’s smarts around the deal, Chalice sits within 130 kilometres of seven operational processing plants. This includes the company’s new 19.9 per cent shareholder, Westgold, whose Higginsville facility is just 22 kilometres from site. The plant currently operates at 1.6 million tonnes per annum and is slated for an expansion up to 2.6 million tonnes per annum.
In a timely move, Corazon has also beefed up its balance sheet. Instos and sophisticated investors joined the party to fund the push, courtesy of a heavily supported $16.5 million single-tranche capital raise, priced at $0.14 per share before costs. Post completion of the acquisition, Corazon will have $12M in cash.
While Chalice represents a single-focus pivot into a new stage of gold development, Corazon says it’s also continuing to push forward with exploration across its broader portfolio. Exploration and drilling programs at its Two Pools and Feather Cap gold projects in Western Australia’s Gascoyne region will run in parallel, building out a diversified resource base.
Next steps for Corazon include immediately launching an aggressive 15,000m drilling campaign at Chalice to test identified regional targets and extend known mineralisation boundaries. Initial technical studies will also focus on resource re-optimisation using current gold prices.
With cash in the bank, a high-grade resource on a granted lease, and a Tier-1 producer backing the play, Corazon has timed its golden run to perfection.
Punters will likely be keeping an eye out for rig mobilisation and the drill rods spinning to test out the potential bounty of its new acquisition.
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