Resources Top 5: Kalamazoo shares go electric as De Grey gold deal plays the right notes
Here are the biggest resources winners in early trade, Tuesday February 6.
Kalamazoo has set itself up for a major payday in a deal to expand emerging mid-tier De Grey Mining’s (ASX:DEG) stranglehold over the Pilbara gold scene.
De Grey will pay $3 million for an option to acquire KZR’s 1.44Moz Ashburton gold project with an exclusivity period of 12 months plus another six months to review the deal after that point where the $2.16 billion gold developer can undertake studies at its own cost.
If De Grey likes the look of things it can pay another $15 million to exercise the option, plus $15 million 18 months after the option is exercised — $33 million all up for KZR if it seals the deal.
The key here is that met test work has already shown the gold mineralisation at KZR’s Mt Olympus deposit is amenable to producing a gold sulphide concentrate grading up to 45g/t gold. That means it could potentially be processed in the pressure oxidation plant De Grey plans to build to process refractory gold at its Hemi project.
If you’ve been living under a rock these past few years, De Grey’s Hemi is the largest gold discovery in WA since at least the Tropicana mine in 2005, boasting 10.5Moz of gold in resource at a grade of 1.3g/t.
Its broader Mallina gold project, located in traditional iron ore and lithium country near Port Hedland, holds 12.7Moz. Hemi is expected to produce in the order of 530,000ozpa over its first 10 years from late 2026 from a reserve of 6Moz at 1.5g/t at average all in sustaining costs of $1295/oz, according to a DFS released last year.
That would make it one of Australia’s five biggest gold mines, and among the largest new gold projects to be developed globally this century.
Kalamazoo will benefit from a minimum $1 million of exploration and assessment activities DEG will have to spend on Ashburton, which it has held since 2020, with that data to come back to the explorer even if De Grey doesn’t exercise its option. Given the sulphidic nature of the ores at Mt Olympus, it presents as a logical move for DEG to take on the smaller resource, which may not justify the higher capital costs associated with refractory processing on its own.
“We are delighted to have reached an agreement with De Grey for the future sale of the Ashburton Gold Project. Since acquiring the AGP in 2020, we have added significant value to the project in a short period of time and should De Grey exercise the Option and acquire the AGP, Kalamazoo will receive a total of $33 million in cash and/or De Grey shares,” KZR’s executive chairman Luke Reinehr said.
On completion, this will be an excellent result not just for our shareholders, but also for De Grey and it’s proposed Hemi Gold Project in the Pilbara which we identified as the natural regional processing facility for the high-grade sulphide gold contained at the Ashburton Gold Project.”
“With the initial $3 million Option Fee, we will look to immediately progress with exploration on our highly prospective Mallina West Gold Project 50km to the southwest of Hemi, and at our exciting portfolio of Victorian Gold Projects.”
(Up on no news)
This one keeps going strong, with the Ivoirian gold and manganese explorer up a further 16.7% today after posting a presentation for the famous Mining Indaba conference in Cape Town yesterday.
$17 million capped Mako is now up a solid 180% year to date, notably collecting a co-sign from our mining guru Barry Fitzgerald not too long ago.
Now trading at 2.8c, the owner of the 868,000oz Napie gold project raised $2m in a placement at just 1c in only November.
The explorer’s plan is to consolidate 374km2 across a 50km greenstone belt of which only 5km has been tested via the acquisition of Goldridge Resources and its Konan project to the north of Napie. Goldridge is notably associated with Dr Caigen Wang, founder and former MD of newly-minted African gold producer Tietto Minerals (ASX:TIE).
He would become a strategic advisor to Mako if the deal goes ahead as planned, boosting the African exploration knowledge of a team led by the husband and wife pair of Peter and Ann Ledwidge.
They played big roles in the Boungou discovery with Orbis Gold which led to a $178m deal in 2015 from Canada’s SEMAFO to take out the gold explorer.
(All up on no news)
Speculation appears to be tying together the rest of the big gainers across the resources micro caps in the quiet season between January half-year reports.
Lithium hunter QX Resources is down 15% year to date, but has collected a handy 21% bump this morning as investors bring the $14m explorer back to favour.
It is taking a double track approach to the battery metal, finding pegmatites grading up to 3.8% and 3.4% Li2O and 1.3% rubidium oxide at its Turner River project up in the Pilbara, located to the south of the world class Wodgina and Pilgangoora lithium mines.
Results are also being eagerly awaited for the first diamond drill hole at the Liberty brine project in California, where QXR has an option to purchase 75% of the 102km2 tenement package.
According to its recent quarterly report, results are due in mid-Feb, possibly a Valentine’s Day love letter for investors. The brine project covers an area twice the size of Sydney Harbour and an “extensive” lithium brine surface anomaly with results of up to 215mg/L Li over 10km, in a setting the Steve Promnitz led explorer says bears similarities to major Argentine brines and the Silver Peak mine operated in Nevada by Albemarle.
Koonenberry is down heavily YTD, but running over 23% higher after releasing results for the second phase of drilling at its Bellagio project in New South Wales yesterday.
It says it has now defined gold mineralisation of more than a gram to the tonne over more than 125m in an era that remains open, with a gold zone in excess of 0.1g/t believed to be open down dip and down plunge to the east of drilling limits.
Significant drill results in the aircore program included 8m at 1.35g/t from 29m, including 1m at 3.97g/t from 30m in hole 23BEAC074 and 2m at 2.33g/t from 24m (23BEAC074).
Previous drilling included a hit of 10m at 1.61g/t Au, including 1m at 3.97g/t. Follow up drilling is planned over the 20km length of the Koonenberry project and the Atlantis copper-gold target.
“We are seeing a lot of ‘smoke’ and >1g/t Au hits at Bellagio, which indicates we are on or near the right structure; we just need to find where the ‘fire’ is,” KNB MD Dan Power said yesterday.
“Several factors point towards the gold mineralisation at Bellagio being structurally controlled by the Royal Oak Fault. Other than the small area we have worked on, the Royal Oak fault itself has seen little to no systematic exploration.”
Australasian Metals meanwhile rose 15%. The tiddler has had little to crow about since the release of its quarterly activities report last month.
A8G’s flagship is the Mt Peake lithium project near Barrow Creek to the south of Tennant Creek in the NT. Covering 640km2, the project shares a boundary with Core Lithium’s Anningie project and saw a diamond drill program last year consisting of three holes for 600m.
Samples have been sent to ALS in Perth for assaying. A8G also completed field mapping and surface chip sampling at the Nanya prospect last month at its Mt Clermont gold project in Queensland, which contains a JORC inferred resource of 63,300oz at 1.13g/t from the Ayres Rock and Retro Extended deposits.
At Stockhead we tell it like it is. While Mako Gold, De Grey Mining, Koonenberry Gold and QX Resources were advertisers at the time of writing, they did not sponsor this article.