Special Report: An exciting high-grade gold-cobalt asset in a part of South America that hosts several tier one mines has emerged as the focus for a reborn Winmar Resources as it seeks a return to the ASX.
Winmar, which has seen a complete overhaul of its board and management team since March, has completed a pre-IPO capital raising of $300,000 and expects to lodge a prospectus for an IPO to raise a further $5-6 million in the coming week.
Activities planned to coincide with the IPO include a 200:1 share consolidation and a change of name to Pathfinder Resources Limited.
Funds from the IPO have been earmarked primarily for exploration on the King Tut gold-cobalt project in the mining friendly “La Rioja” region of northern Argentina, not far from the Veladero gold mine owned by Barrick Gold and Shandong Gold, which produced 550,000 ounces of gold in 2019.
The Gualcamayo mine, which is owned by Colombian company Mineros S.A. and regularly produces more than 100,000 ounces of gold a year, lies to the south, while across the Chilean border to the north-west lies the Cerro Castle project, which contains 23 million ounces of gold in reserves.
The acquired tenements cover approximately 2,800 hectares and includes the historic King Tut mine, which produced gold and cobalt at grades of up to 28 g/t gold and 2.85% cobalt from both surface and underground workings.
Samples collected from the project area in 2018 and 2019 confirmed the significant historic grades, with assays returning up to 37.03 g/t gold and 2.56% cobalt from mineralised veins and historic stockpiles.
Winmar executive chairman Shannon Green said the company conducted due diligence on about 50 assets around the world before moving on King Tut.
“We think the King Tut mine is a window into a much bigger system,” he said.
“The tenure has never been drilled, never been subject to modern exploration and we are very excited to get the opportunity to test its potential.”
The consideration for the acquisition is share-based, with Winmar to pay the vendors 5.5 million Winmar shares (on a post-consolidation basis) at the time of the IPO, upon the completion of a formal share sale agreement for the asset.
The vendors will also receive seven million performance shares vesting on the achievement of two separate exploration milestones and be granted a net smelter royalty of 2% on the first 500,000 ounces of production from King Tut.
Cobalt exposure comes cheap
In determining the consideration to be paid, Green said the asset was treated as a pure gold play with no value attributed to the cobalt that is found in association.
“It’s a great thing for shareholders that we haven’t had to pay for the cobalt,” he said.
“That will potentially provide valuable by-product credits and exposure to the lithium-ion battery thematic that is taking off around the world.”
Based on the anticipated timeline, Winmar could be back trading on the ASX as Pathfinder by early November, with exploration at King Tut starting soon after.
The deal has been structured so that the company will have 100% control of the asset from the outset, but it will retain access to the local vendor group in Argentina to assist with planning and execution of in-country activities.
Green joined Winmar in March along with Sixty-Two Capital founder Sufian Ahmad, who is a non-executive director and the company’s largest shareholder.
At the end of April, Adelaide-based corporate finance specialist James Myers was also named as a non-executive director, rounding out the current board.
This story was developed in collaboration with Winmar Resources, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.