• PGD sells Deadman Flat and Perry Creek project for A$1.5m of CMM shares
  • Company retains upside in form of 1% precious metals royalty
  • PGD to focus on promising Tin Can trend at Newman gold project
  • Peregrine’s largest shareholder Mark Creasy’s Yandal investments is increasing its stake through the current $2.54m Non-Renounceable Entitlement Issue

 

Special Report: Peregrine Gold has sold the Deadman Flat and Perry Creek projects to Capricorn Metals for a tidy $1.5m worth of shares in the star ASX gold producer.

Deadman Flat is in the most southern part of the Newman gold project and west of Capricorn Metals’ (ASX:CMM) 120,000ozpa Karlawinda gold project in a well-known region for gold prospectivity.

The sale will realise value for the prospects, strengthening Peregrine Gold’s (ASX:PGD) balance sheet as it zeroes in on Newman’s high grade Tin Can and Tin Can West discoveries.

The Deadman Flat gold prospect has been historically mined through alluvial and hard rock workings dating back to the 1930s, with Capricorn keen to explore the few drillholes completed outside of the prospect and follow up on ‘substantial evidence’ for widespread gold mineralisation in the region

Peregrine also gets to keep the project upside, with a net smelter royalty of 1% for precious minerals and 1.5% for non-precious minerals – and up to $2.25m in milestone payments.

The CMM shares are a valuable commodity. Up ~20% YTD, Ord Minnett sees them going even higher from $7.53 today to $8.10 and the development of the Mt Gibson gold mine looms as a key trigger to increase the value of the $3bn miner further for holders like Peregrine.

 

Retaining exposure to exploration success

The company says the sale directly results in balance sheet improvements which pave way for further exploration and potential discoveries at the Tin Can Trend at Newman, where drilling last year returned 4m at 9 g/t gold.

“The company is delighted to secure this agreement with Capricorn as it provides our shareholders with a multitude of positives,” technical director George Merhi said.

“Not only does the transaction give our shareholders exposure to an ASX leading gold producer, it maintains exposure to exploration success on what we believe to be very prospective ground.

“It also comes at a fortuitous time for the company as we look to expedite our efforts pursuing further discoveries at the exciting Tin Can Trend.

“With a Non-Renounceable Entitlement Issue near completion, a bolstered balance sheet and a pipeline of exploration avenues, we are excited to increase our gold exposure and deliver more exploration results at a time when gold prices are at or near record highs.”

Peregrine’s board and management are well placed to make calls on the make up of the company’s exploration portfolio.

Merhi spent 15 years as exploration manager for Mark Creasy’s Creasy Group. The billionaire prospector, one of Australia’s most successful resources investors is also PGD’s largest shareholder through his Yandal Investments with a stake of around 11%, which will increase as he takes up $1m in the current Non-Renounceable Entitlement Issue which is raising $2.54m at $0.15.

 

Location of the Deadman Flat project. Source: PGD.

 

Tin Can has already shown its potential to deliver high grade gold discoveries in shallow drilling at both Tin Can (8m at 8.33g/t) and Tin Can West (4m at 9g/t), with drilling still yet to delve into the deeper fresh rock.

PGD also holds ground at its Mallina project, adjacent to De Grey Mining’s (ASX:DEG) legendary 11.5Moz Hemi discovery, which made the latter a $5bn takeover target for Northern Star Resources (ASX:NST).

Gold is currently trading at around A$4,390/oz.

 

 

This article was developed in collaboration with Peregrine Gold, 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.