GBM’s belief in the potential of its Mount Coolon gold project (and the wider Drummond Basin) has been validated in a big way with Newcrest signing up for a $25m farm-in agreement.

Under the agreement, Newcrest will have the right to earn up to 75% in the Mount Coolon tenements by spending up to $25m to advance exploration on the known resources and prospective targets at the project under the three-stage farm-in over six years.

For GBM Resources (ASX:GBZ), the strategic farm-in allows it to focus its own efforts on the highly prospective Twin Hills and Yandan gold projects, which Newcrest will have the first right of refusal over in the event that they are put up for sale or joint venture.

This supports the company’s plan to consolidate the three historical gold producers in Queensland’s Drummond Basin which have a combined JORC resource of about 1.6Moz with an update imminent for Twin Hills and Yandan.

“Over the last 3 years GBM has assembled a highly prospective tenement package in the Drummond Basin where large high grade epithermal gold deposits exist and we are pleased to have joined forces with Newcrest on advancing exploration in the basin and accessing its funding and geological experience in epithermal systems,” managing director Peter Rohner said.

“In the short term GBM will continue its exploration focus on the highly prospective Twin Hills tenement package and advance resource re-estimation work following the recent initial drilling program.”

Newcrest general manager exploration Fraser MacCorquodale added that the Drummond Basin has a historic pedigree of hosting high grade epithermal mines and that the gold major is looking forward to use both teams’ expertise to accelerate exploration at Mount Coolon to support the potential for discovery.

Farm-in terms

Under the agreement, Newcrest must fund or incur at least $2m within a period of 24 months. This includes carrying out at least 3,000m of drilling on the tenements.

The gold major can then move on to Stage 1 of the farm-in, which requires a total of $7m in expenditure over 36 months (inclusive of the initial stage expenditure and timing) with at least 10,000m of drilling – to earn a 51% interest in the Mount Coolon Project.

Should Newcrest satisfy the Stage 1 commitments, it may then incur further expenditure of $18m on exploration including another 10,000m of drilling within a further 36 months to earn the remaining 24% interest.

Once both phases are satisfied, the two companies will establish a joint venture to own the tenements and to carry out all exploration, development and mining.

Mount Coolon

Mount Coolon is located in the northern Drummond Basin about 250km west of Mackay and has historical production totalling 590,000t grading 12.2 grams per tonne (g/t) gold, or 232,000oz of contained gold.

Drilling carried out by GBM in 2020 and 2021 have demonstrated a substantial multi-stage hydrothermal system at the Glen Eva and Eastern Siliceous (GEES) zone.

Zoning across epithermal systems has been well documented at several deposits and a lead-zinc to gold-silver-tellurium to gold-arsenic-antimony zoning consistent with other epithermal deposits is present at GEES.

This anomaly and associated abundant disseminated pyrite has been interpreted by the company to represent the concealed alteration halo of a large hydrothermal system.

Mount Coolon currently has a resource of 6.65Mt at 1.5g/t gold, or 330,000oz of contained gold.

This article was developed in collaboration with GBM Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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