Meeka Metals has made a bold grab for one of Western Australia’s more intriguing forgotten gold belts, striking a deal to acquire strategic mining tenements surrounding Mt Holland in the state’s Southern Cross region.
The acquisition hands Meeka control of 71 square kilometres of tenure covering 24 kilometres of southern, widely regarded as the key host rocks for gold mineralisation in the district.
The purchase price includes $10 million on completion, another $10 million three months later and just under 118 million Meeka shares, representing 3.8 per cent of the post-issue capital base. The cash component will be funded from Meeka’s existing $50.1 million cash position as of March 31 and operating cash flows.
For seasoned gold watchers, Mt Holland is no random patch of dirt. The area historically produced around 1.2 million ounces of gold at a healthy 5.12 grams per tonne (g/t) from the famed Bounty gold mine before operations shut in 2001 when gold prices dived to $500 an ounce.
Today, with bullion trading at 10 times those prices, the economics look very different.
Notably for Meeka, the old Bounty mine is not part of the acquisition. Instead, the company has secured the surrounding ground, where several known gold deposits, including its Blue Vein, Bushpig and Razorback, sit waiting for modern attention.
And the numbers already on the board are likely to have the company’s geos leaning forward.
Historic hits at Blue Vein included 20 metres grading 12.8g/t gold from 63m, 23m at 9.2g/t from 49m, 14.8m at 9.6g/t from 426.7m and a spectacular 1.08-metre slice running at 81.9g/t gold from 123.9m. Another hole punched out 10.92m at 4.4g/t from 161m.
Meeka says there has been no significant gold-focused exploration on the tenure for almost 15 years, with little to no drilling below shallow historical intersections. Many of the geochemical anomalies along the extensive strike are still largely untested.
Meeka Metals managing director Tim Davidson said: “This Archaean greenstone belt is evidently fertile, yet the belt has received very limited modern exploration for gold over the past 15 years. The ~24km of north-south striking, gold-hosting BIF within the acquired tenure present compelling targets for drilling, and we intend to systematically drill out these targets over the next 12-18 months.”
Management has already begun verifying historical drilling data to convert older non-2012 JORC resources into modern, compliant resources.
Blue Vein, Bushpig and Razorback are first in line, with that work expected to take three to six months.
Once completion lands, Meeka plans to unleash an initial 20,000-metre systematic drilling campaign across the 24km gold corridor over the next 12 to 18 months.
Adding to its credentials, the project sits near existing regional infrastructure, including accommodation, a sealed airstrip, grid power, water and direct road access.
Meeka Metals’ core focus will, of course, remain at its producing Murchison gold project near Meekatharra. The project hosts a large, high-grade resource of some 1.2 million ounces of open pit and underground material running a handy 3g/t gold.
Since its first gold pour last July, the project has quickly settled into steady production, while the company continues to grow its resource base.
Meeka has now taken its cash balance to $50.1 million following the March quarter, from $37.3 million at the end of December, providing a strong buffer for the company and ample funding for its ongoing ounce-adding activities.
Meeka may have already built a name for itself through its Murchison assets, but this latest move suggests the company is thinking bigger. By adding a historic high-grade belt with modern exploration neglect, multiple known deposits and district-scale strike, Meeka may have just bought itself a second major gold play in its expanding WA empire.
If the rigs start repeating the old grades at depth or along strike, Mt Holland could quickly move from a forgotten goldfield to a major revival story.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Andrew Todd
