Here’s why the Twin Hills buy is a key step in GBM’s grand gold plan

GBM’s goal of becoming a significant gold producer in the Drummond Basin has been boosted by its acquisition of the high-grade Twin Hills project from Minjar Gold.

The company has several good reasons to be excited about the acquisition with the first being the addition of 632,900oz of gold to its resource inventory, taking the total up to about 1.5Moz – all of which are located within 70km of the planned Drummond Basin Processing Hub.

Both the 309 and Lone Sister deposits are also considered to be highly prospective for the discovery of additional mineralisation, an exciting prospect given that previous drilling had returned some bonanza gold grades peaking at 2,940 grams per tonne (g/t) at 309 and 939g/t at Lone Sister.

To top it off, GBM Resources (ASX:GBZ) is acquiring Twin Hills for $2.1m with an additional $1.48m as financial assurance in respect of the environmental authorities for the tenements, meaning that the consideration is at a highly competitive price of just $5.53 per gold resource ounce thanks to some fancy negotiating that kept the price at roughly the same level that the company had reached under the previous deal in 2017 when gold prices were lower.

“Completion of this transformational transaction represents a significant step in the execution of our ‘processing halo’ strategy to build over two million ounces under ownership within the Drummond Basin, providing the potential for transition to a genuine mid-tier Australian gold company,” managing director Peter Rohner said.

“We look forward to commencing an aggressive initial extensional and infill drilling program at Twin Hills along with progressing our exciting Yandan and Mt Coolon projects.”

Twin Hills project

The 309 and Lone Sister deposits that make up Twin Hills are located about 7km apart and have previously been interpreted as intrusion related, high gold fineness, low sulphidation epithermal gold deposits in the western arm of the Drummond Basin.

Both deposits have existing resources with 309 hosting a combined resource of 4.9Mt grading 2.4g/t gold and 3g/t silver for a contained resource of 372,900oz of gold and 471,200oz of silver, while Lone Sister hosts 4Mt at 4g/t gold and 9.4g/t silver (260,100oz of gold and 604,800oz of silver).

The resource at 309 also has a greater level of certainty given that 2.8Mt grading 2.3g/t gold and 3.4g/t silver is classed within the higher confidence Indicated category while 320,000t at 4.4g/t gold and 6.4g/t silver is defined as a measured resource.

Despite this, GBM believes that potential depth extensions and strike repetition of both deposits have not been adequately tested, a theory it intends to test in early 2022 along with a re-estimation of resources. In addition, the project area around Twin Hills has many additional targets that have interesting historical drill intercepts.

Capital raising

The acquisition of Twin Hills marks the first step in what is expected to be a transformational year for the company.

To help support its drilling and exploration activities at Twin Hills and its other Drummond Basin projects, GBM plans to carry out an offer of 1 unlisted loyalty option priced at 2.5c for every 10 shares held by existing shareholders.

Each option is exercisable at 7.5c on or before November 2022 with the company expecting to raise about $1.28m from the options issue and up to $3.83m if they are all exercised.

GBM expects to file the prospectus for the options on 2 February.

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.