PNX plots new path to gold production with private partner
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Special Report: PNX Metals’ plans to move into gold production in the Northern Territory have received a major boost with the offer of up to $40 million in funding to develop its Fountain Head project as a central processing hub in the Pine Creek region.
PNX (ASX: PNX) announced on Wednesday it had signed a non-binding term sheet with private company Halifax Capital and its subsidiary Bridge Creek Mining for the proposed financial commitment, which would be used to fund the acquisition, construction and commissioning of a conventional carbon-in-leach (CIL) gold plant at Fountain Head.
The term sheet also outlines the formation of an unincorporated joint venture between PNX and BCM to mine and process mineral resources owned by both companies in the region.
PNX and BCM would share equally in any gold production, and would contribute to direct operating costs in the same proportion.
PNX managing director James Fox said the proposed JV gave the company “a clear path to monetising the Fountain Head gold resource and certainty around a funding solution that minimises dilution for shareholders and significantly de-risks the project”.
“Halifax and Bridge Creek are motivated and experienced partners and their involvement as initial owners and operators of the project infrastructure will allow PNX to focus on generating a pipeline of additional resources for processing through regional exploration within its significant tenure in the NT,” he said.
PNX had been considering a low-cost heap leach operation to develop the Fountain Head resources, which currently stand at 2.94 million tonnes grading 1.7 g/t Au for 156,000 ounces of gold.
The company also said the CIL process route contemplated under the Halifax/BCM proposal would deliver material operating and environmental benefits including increased rate of recovery and stable and earlier cashflow.
Along with processing the Fountain Head and Bridge Creek resources, the partners anticipate also making plant capacity available to other parties in the region.
“The opportunity also allows the JV to establish a key piece of infrastructure in the area to not only service our pipeline, but other companies that have stranded assets that haven’t been able to access a gold mill,” BCM director Joseph Mills said.
Mills said the partners would engage closely with indigenous groups on jobs and would have a strong focus on environment and sustainability in developing the project.
Formal documentation for the proposed transaction is anticipated to be completed within 90 days, while commercial gold production from Fountain Head remains scheduled for 2021 subject to the receipt of necessary environmental and government approvals.
As part of the deal, PNX will be granted an option to acquire the Fountain Head processing infrastructure after either seven years of operation or after all the PNX and BCM resources have been mined, whichever occurs first.
Halifax is a single-family office based in Sydney that has recently taken a strategic long-term approach to investing in gold and gold mining businesses.
The company said its investment in BCM, a privately owned gold mining company, was a strategic and complementary opportunity given its other investments in the NT.
This story was developed in collaboration with PNX Metals, 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.