GBM executes deal to sell Mt Morgan gold project to Smartset
GBM has executed a binding agreement to sell its non-core Mt Morgan gold-copper project to Smartset Services, allowing it to focus on its flagship Drummond Basin gold assets.
The company will receive 20,459,545 shares in Smartset for the project, giving it a 47.5% stake in the TSXV-listed company prior to a concurrent C$8m equity raising.
Smartset will also make a cash payment to GBM with respect to any amount expended by GBM on obtaining native title, landholder access and compensation agreements and on exploration expenditures to a maximum of C$282,500 ($315,254).
Assuming Smartset raise the $8m in equity at CAD 50c per share as proposed, that makes GBM’s shares worth around ~$11m AUD, a significant value realisation.
This substantial stake means that while GBM Resources (ASX:GBZ) will focus on its highly prospective Drummond Basin Projects (1.6 Moz Au in JORC resources), it will still retain exposure to Mt Morgan especially given that Smartset is clearly making serious moves in Australia with moves to acquire four additional gold and copper projects in northeastern NSW and additional tenement applications in Queensland.
Smartset also plans to carry out systematic, well-funded exploration of Mt Morgan targeting discovery of large-scale gold and copper deposits.
“While finalising the required documentation has taken longer than anticipated, we are very pleased to have now executed the definitive agreement for the sale of our Mt Morgan gold-copper project with the proven skillset of the Smartset team,” GBM managing director Peter Rohner said.
“It is a further, consistent step in the execution of GBM’s stated portfolio management strategy.
“We also look forward to assisting the Smartset team in completing the planned financing to allow us to accelerate the exploration and potential value unlock of the Mt Morgan Project, while protecting GBM’s own balance sheet and core project focus in the Drummond Basin.”
The divestment comes as exploration at the 309 Deposit within the Twin Hills Project in the Basin returns high-grade hits such as 49m @ 5.18 g/t and 19m at 5.22g/t gold outside the existing resource model.
GBM is currently updating the resource geological model and expects to update the 309 resource in the current quarter.
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.