Tombola gold (ASX:TBA) is locking up the ground around its Mt Freda project by formalising its acquisition of the Lorena gold project and executing a term sheet for five project sites across Cloncurry.

The acquisition of Lorena includes fully permitted mining and exploration leases, the existing open cut gold and copper mine, and a 250,000-300,000 tonne per annum processing plant which will enable the company to fast-track gold production by utilising existing cash reserves.

The formalisation of the agreement includes a revision of the acquisition terms with Tombola Gold (ASX:TBA) to now pay the vendor 5 million TBA shares worth about $300,000 and $7m in cash with $2m up front and the balance over a six to nine month period.

This effectively represents a $700,000 discount from its previous agreement to pay the vendor 50 million TBA shares and $5m in cash.

Lorena is just 30km from its flagship Mt Freda project and is expected to generate free cash flow from production activities.

“Entering into the formal agreements for the Lorena assets is a pivotal step in Tombola’s future of becoming a meaningful Australian gold producer,” managing director Bryon Miles said.

“Importantly, the acquisition not only allows Tombola to increase gold production as well as undertake gold-optimisation planning studies, but now we will have the capacity to treat various ore bodies with gold and copper in the Cloncurry region.

“The acquisition terms were negotiated to allow Tombola to utilise its existing cash reserves and cash flow to fund the cash consideration from near-term gold production, however we have now added a substantial asset to the balance sheet which should allow Tombola to expand faster and minimise dilution for shareholders.”

Development ready projects

Additionally, the execution of the terms sheet with True North has granted the company with five gold projects that give it a significant regional footprint around its Cloncurry base of operations.

These include three development ready and permitted mine projects which can fast track feed to the Lorena plant, as well as a large tract of highly prospective ground adjacent to Mt Freda.

Wallace South – located 39km south of Cloncurry – is a large gold-copper system that the company aims to bring quickly into production to provide feed to the Lorena plant along with the Wynberg project about 20km southeast of Cloncurry.

Miles adds that both acquisitions will add to Tombola’s development story as it looks to fast-track its transition into a meaningful gold producer.

“In addition, the extensive pipeline of exploration projects offers significant upside to increasing the resource base of the company,” he concluded.

The completion of the acquisition is subject to due diligence and shareholder approval.




This article was developed in collaboration with Tombola 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.