QMines finalising purchase of Mt Mackenzie gold project

• QMines prepares to complete the acquisition of the Mt Mackenzie gold-silver project
• This will increase QMines’ resource base by around 129,000oz gold and 862,000oz silver
• Work underway to evaluate the integration of Mt Mackenzie into a broader regional mine plan

Special report: QMines is in the final stages of acquiring the Mount Mackenzie gold-silver project after completing due diligence.

The $2.48 million acquisition of Mount Mackenzie Mines from Resources and Energy Group (ASX:REZ) is expected to increase QMines’ (ASX:QML) gold and silver exposure, supporting its strategy to develop a diversified minerals portfolio in central Queensland.

Mt Mackenzie is an advanced staged project, about 140km northwest of Rockhampton and just 45km from the company’s Develin Creek copper-zinc landholding.

The existing resource comprises 129,000 ounces of gold and 862,000 ounces of silver, characterised by shallow mineralisation that is open in all directions.

QML is updating the mineral resource estimate, with results anticipated soon.

Funding locked in

In support of the acquisition and near-term development plans, QMines has entered into a convertible note arrangement with a major existing shareholder.

Key terms of the convertible note include:

• Total proceeds of $1m with an additional $500,000 available upon request.
• The interest rate is 15% per annum, paid in advance each year in cash or shares (at the noteholder’s choice) priced at 4.5c per share.
• The convertible notes are convertible into fully paid ordinary shares in the capital of the company at a conversion price of 4.5c per share (a 30% premium to the 30 day VWAP) at the election of the noteholder;
• Three-year term with early redemption permitted at QMines’ discretion’; and
• The convertible notes will be secured by a mortgage over Mt Mackenzie tenements (EPM 10006 and MDL 2008) and by a specific security interest over 100% of the fully paid ordinary shares of Mt Mackenzie Mines.

Drilling imminent

QML is in the final phase of planning its first drilling program at Mt Mackenzie.

The program will focus on confirming historical high-grade gold and silver results such as 36m at 4.4g/t Au and 25g/t Ag, 26m at 12.78g/t Au and 34g/t Ag and 12m at 14.93g/t Au and 61g/t Ag.

It will also look to expand the current resource and generate inputs for a revised geological model and updated mine plan.

Initial site work, including drill pad construction and access track upgrades, is also expected to begin soon.

Watch: QMines ramps up towards copper production

‘Capacity to execute’

QML executive chairman Andrew Sparke said the company was delighted to confirm its intention to complete the Mt Mackenzie gold-silver project acquisition.

“The project is a highly strategic and value-accretive addition to our asset base, increasing gold and silver exposure and providing operational synergies with our Mt Chalmers and Develin Creek projects,” he said.

“The strong financial support from one of our largest shareholders, via the secured convertible note on favourable terms, demonstrates confidence in our strategy and capacity to execute.”

This article was developed in collaboration with QMines, 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.