Chalice Mining spin-out thirsty for 'Tier 1' gold discoveries in Victoria and WA

A new explorer spun out of exploration darling Chalice Mining (ASX: CHN) will be a “standout” in the growing Victorian gold space, according to managing director Alex Dorsch.

The company is looking to split off its 5000km2 Pyramid Hill project 65km from the 22Moz Bendigo goldfield as it moves towards a maiden mineral resource at its world class Julimar nickel-copper-PGE discovery near Perth.

Chalice will also throw its farm-in to Metal Hawk’s (ASX: MHK) Viking project near Norseman in WA into the deal, which will likely take place via a 100% in-specie distribution to existing Chalice shareholders.

The deal is expected to take place in the December quarter.

While Chalice’s eyes have unsurprisingly wandered to Julimar, it has drilled some 117,000m into the previously unexplored Pyramid Hill project since acquiring the ground in 2017.

It was in fact the main game for Chalice until it made the Gonneville discovery at Julimar just 70km north of the Western Australian capital in early 2020.

“It is easily the largest 100 per cent owned land package in the Bendigo goldfields in Victoria,” Dorsch told investors on a briefing yesterday.

“We have over 5000 square kilometres as well as some additional licence applications on top of that.

“It is a high profile asset and will certainly attract attention for the new entity.”

Chalice Mining share price today:

Chalice drilling provides a strong base for NewCo

While seven drill rigs are currently working away feverishly to establish a maiden resource at Julimar, Chalice has still found time to test its high priority Karri target at Pyramid Hill.

An 11-hole, 3840m diamond drill program was recently completed across Karri’s more than 2.5km strike length, with a best result of 5.1m at 14g/t from 100.9m including a 2.2m interval at an impressive 32.2g/t.

The style of mineralisation bears some similarities to that found at Bendigo and Kirkland Lake’s (ASX: KLA) 600,000ozpa-plus Fosterville mine.

“We’ve got the right characteristics in that target for a significant gold system,” Dorsch said.

“We’ve got tightly folded, upright Castlemaine Group sediments and that really is a characteristic feature of all the large gold systems in the Bendigo zone.

“Obviously the most famous now being Fosterville which as most people know hosts the high-grade Swan Zone of about 3Moz at over 30g/t gold.

“Bendigo is about 65km away from our Karri Prospect and that’s a 22Moz gold field, so it’s quite amazing that in Australia we’ve got greenfield targets without any really historical drilling before … we found this prospect in 2018.”

Chalice has also completed almost 35,000m of wide-spaced aircore drilling at its Muckleford and Mt William areas northwest and northeast of Fosterville, which sit under shallow cover, striking 6m at 3.8g/t and 13m at 1.5g/t to the end of the hole in another intersection.

Another option for exposure to Victorian gold story

Gold in Victoria is seeing levels of interest barely touched since the 1800s gold rush.

How will the new company compare to other regional players?

Dorsch suggested Catalyst Metals (ASX: CYM) would be a good yardstick, which boasts a $200 million market cap and has had success exploring along the Whitelaw Gold Belt on adjacent tenements.

“Probably the closest analogue is our immediate neighbour to the east, Catalyst, who are in a 50-50 joint venture with Hancock Prospecting,” Dorsch said.

“Those who’ve followed Catalyst over the last 4-5 years would no doubt be aware of a number of gold discoveries they’ve made immediately east of our Muckleford area at Four Eagles and Tandarra.

“That’s probably our immediate neighbour and the nearest analogue. Certainly we won’t have a peer with the breadth of the exploration portfolio.

“Certainly the addition of Viking puts it in a standout position as a new standalone gold explorer.”

More money was spent in Victoria exploring for the yellow metal in the March quarter than ever before.

And it is not just Fosterville steering the wheel.

Stavely Minerals (ASX: SVY) has been studiously working on its Thursday’s Gossan copper-gold project in recent times.

Navarre Minerals is also garnering interest around its Stawell Corridor gold projects including its Morning Bill prospect, which could be part of a larger porphyry system.

It already has a mineral resource of 304,300oz at the Stawell Corridor gold project across the Resolution and Adventure deposits.

Revenue is steadily increasing for Kaiser Reef Gold (ASX: KAU) at its A1 gold mine, where the junior poured its first gold in January.

Capital raise still in the planning stage

Chalice is the latest of a host of exploration companies converting an extra on their books into the lead in a new company.

Based on recent spin-outs, the appetite for risk capital is there to support it.

Chalice Mining plans to split up the companies via a 100 per cent in specie distribution to existing Chalice shareholders.

That will mean Chalice, which has been known to hold and sell stakes in junior mining companies as investments in the past, will not retain ownership of the new explorer.

It does mean chairman Tim Goyder, 11 per cent owner of Chalice and chair of lithium play Liontown Resources (ASX: LTR), should have the largest stake in the new company on listing, though the company’s board and management has not yet been finalised.

“I think that reflects really the quite discrete strategies of the two entities,” Dorsch said.

“Obviously Chalice really being focused now on nickel-copper-PGE in our new mineral province here in the West Yilgarn and the NewCo will really have all the gold interests, so it will be a very gold-focused exploration company.”

Dorsch was also coy to name a price or raising target for the IPO, citing ASX and ASIC rules, only suggesting the company would be well stocked for an “aggressive” exploration program at Pyramid Hill and Viking.

At Stockhead, we tell it like it is. While Metal Hawk, Kaiser Reef Gold and Navarre Minerals are Stockhead advertisers, they did not sponsor this article.