Golden State Mining is tightening its focus on its flagship Yule project near the world class Hemi discovery after selling an 80% stake in the Cuddingwarra and Big Bell South gold projects to fellow ASX-listed explorer Caprice Resources.

Golden State Mining (ASX:GSM) will bank ~$750,000 from the sale including $200,000 cash and 2.5 million Caprice shares, and retain a 20% interest in the projects in a JV managed by Caprice.

It will enable GSM to realise value for its Mid-West gold holdings and focus its full attention on Yule, where a major 4000m RC drilling campaign is underway.

“The consideration mix of this transaction provides GSM with exposure to exploration success by Caprice in the Murchison region while allowing GSM to continue to focus on its 100% owned Yule project in the Mallina Basin, where a 4,000m follow up RC drilling campaign is underway on a number of exciting gold exploration targets,” GSM managing director Michael Moore said.

Sale conditions provide multiple pathways to profit

The sale makes sense for Caprice, which owns the nearby Island gold project, while GSM will be leveraged to future exploration success either as a minority partner or selldown to convert its stake into a 2% royalty.

If something big is found Caprice may elect to pay $5 million to purchase the hypothetical royalty down the line.

GSM is free-carried to a PFS, meaning it will not need to contribute anything until the company has an idea of whether a viable project exists at Cuddingwarra and Big Bell South.

Both are located in and around multi-million ounce deposits hosted by Westgold Resources at its Cue gold project, including the historic Big Bell mine, which is 20km north of the 55km2 Big Bell South project.

GSM has another 250,000 options in Caprice, which come into the money at 25c, around 13.5% above its opening price today of 22c.

Exploration ongoing at Yule

Golden State Mining has built a substantial package of ground over 700km2 of the Mallina basin in the Pilbara, with large intrusive targets 15km from Hemi that bear similar magnetic structures.

The major RC gold drill drive is one of three significant drilling programs targeting discoveries in the modern day exploration hotspot, with another 1500m RC campaign to chase lithium targets and a 15,000m aircore program to establish regional prospects across the vast and underexplored land holding.

The current program includes the Target 1 East prospect, where an intercept of 4m at 2.3g/t including 1m at 7.6g/t provides plenty of encouragement, with another high priority target at 2A hosting an 800m by 1400m arsenic anomaly.

GSM still holds the early stage Four Mile Well project near Leonora as well as the balance of the Cue gold project on a 100 per cent basis, including the historic Cue No. 1 and Salisbury mines.




This article was developed in collaboration with Golden State Mining, 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.