$1.6m market cap Minnow 3D Resources (ASX:DDD) has entered into a deal to buy the historic (but recently revamped) Adelong gold project in NSW.

The 70sqkm project covers the historic Adelong goldfield, which produced +800,000oz of gold in the 19th and early 20th centuries.

Historical gold grades were very high. Production at the Challenger shaft, for example, averaged 149 grams per tonne (g/t) between 1859 and 1876.

For about $1.1m, 3D gets a bunch of walk-up, high-grade drill targets, a previously operating mine with existing 127,000oz gold resource plus ~$7m worth of plant and equipment:

That’s the sort of setup you could potentially build a gold company on – if all goes to plan.

A number of companies have explored this area in recent years — about 36,500m of drilling was conducted, mostly around Challenger and Challenger Extended — but efforts to establish a profitable mine have been unsuccessful.

3D managing director Peter Mitchell believes they know where the most recent owners, which went into administration around 2016, went wrong.

“One of the problems they had was a low gold recovery [through the plant],” he told Stockhead.

“The ore is amendable to high gold recovery, but the way they had configured the plant — they used equipment that was oversized.

Before the company went into receivership it employed about three major consultant groups to assess what was going wrong, Mitchell says.

“They did a fairly good assessment of the mill and the mining activity, which means we actually have a pretty good idea of what went wrong, and what needs to happen before we start mining,” he says.

“We aren’t going in blind. Bottom line — it is not a problem with the resource.”

If the deal goes through, 3D will spend the first year at Adelong on resource development and planning.

There’s an enormous database from 30 years of exploration in this area.

Many of the deposits have “sort-of” resources but haven’t been brought up to JORC standard, Mitchell says.

“What we are trying to do in the initial 12 months is to bring the resource up and get the development consents right for the project – right now, they only have development consent to mine Challenger,” he says.

The stock – which is down 25 per cent over the past 12 months – jumped 100 per cent to 0.2c per share in morning trade.