QMines grows footprint with Mount Mackenzie gold-silver opportunity

• QMines executes binding term sheet with Resource & Energy Group for the Mount Mackenzie project
• The project lies 140km northwest of the company’s flagship Mount Chalmers copper asset
• Mackenzie comes with a 129,000oz gold and 862,000oz silver resource with potential for expansion

Special report: QMines is consolidating its footprint within haulage distance to the flagship 9.6Mt Mount Chalmers asset in central Queensland with a new gold-silver opportunity at Mount Mackenzie.

The company will acquire 100% of Mount Mackenzie for $2.5m from Resource and Energy Group after entering into a binding term sheet.

The acquisition – settled through a cash payment of $1m and the issue of 33m QML shares escrowed for 12 months – comprises two granted leases with resources and exploration upside.

It comes with 129,000oz of gold and 862,000oz of silver already in place, which is expected to improve the proposed life of mine at the Mount Chalmers copper project.

QMines (ASX:QML) plans to incorporate Mount Mackenzie into the Mount Chalmers mine plan where the deposit will potentially be treated at the proposed Mount Chalmers treatment plant, 140km to the southeast in Rockhampton.

Its location, northwest of Mount Chalmers and proximal to Develin Creek, is an added benefit providing access to the Bruce Highway and enabling future ore haulage on sealed roads and shared infrastructure.

Leveraged copper play

QML is on its way to becoming a 10,000–20,000tpa copper equivalent producer with a prefeasibility study last year indicating a 10.4-year project costing $191m with a 1.8-year payback and NPV of $373m.

Metal prices are giving the company a tailwind, particularly for gold, with the yellow metal rising above the US$3250 per ounce mark last Friday, a new record given a weaker US dollar amid surging demand for safety following the US-China trade war.

It means there will be considerable interest in an updated and revised mine plane for Mount Chalmers, expected in Q3.

First up will be a resource update for the satellite deposit at Develin Creek where drilling delivered 114m at 1.65% copper from 11m.

‘Growth opportunities’

QML executive chairman Andrew Sparke said the acquisition represented a transformative step for the company, significantly enhancing its asset base and aligning with its strategic ambition of becoming a leading multi-asset copper and gold producer in Queensland.

“Mount Mackenzie not only brings immediate gold and silver resources but also growth opportunities and operational synergies with our existing projects,” he said.

“We also wish to warmly welcome Resources & Energy Group and its shareholders to the QMines register.

“This arrangement will provide you with exposure to an accelerated exploration and development strategy for the Mount Mackenzie project as well as participation in QMines’ exciting copper and gold exploration and development strategy.”

What now?

Historical drilling undertaken by previous explorers provides the company with a platform to extend and improve on known gold and silver resources.

A review of this data, along with geological and geophysical analysis, has indicated untested potential at depth and along strike.

QML believes this highlights an opportunity to increase the Mount Mackenzie resource through targeted exploration.

Watch: Reeling a big fish at Develin Creek

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.