ASX-listed Aurumin looks set to pocket $3 million and a 2 per cent net smelter royalty from the Mt Dimer gold mining tenements after entering into a binding sale agreement for the site with Beacon Minerals.
In addition to the terms of the deal, Beacon has agreed to take $500,000 worth of fully-paid ordinary shares in Aurumin within five days, in exchange for an exclusivity period that will kick in on the signing of the sale agreement. The 2 per cent net smelter royalty is for gold production in excess of 12,000 ounces and on all other minerals.
Mt Dimer sits about 120km north-east of the Western Australian town of Southern Cross, at a site where historical high-grade production delivered more than 125,000 gold ounces, including 600,000 tonnes at 6.4 grams per tonne gold.
Aurumin has put significant work into the operation, including planning shallow open pits at its high-grade Lightning and Golden Slipper deposits. The company says Lightning is a high-grade unmined deposit and recent drilling produced results of 10m at 20.22g/t gold, including a 1m hit grading a whopping 153.5g/t gold.
Development of Golden Slipper will focus on works to the south of a small open pit mined in the 1990s to depth of 63m and where 67,000 tonnes at 3.4g/t gold were extracted for 7325 gold ounces. Both deposits are on existing mining leases at a previously operating site with solid infrastructure in place, including access to haulage roads, an air strip and camp facilities.
Management says the divestment of Mt Dimer will allow it to pay back a majority of a convertible note, currently with $4.4 million outstanding, that was taken on with the acquisition of its Sandstone assets early last year.
This is a good outcome for both parties, allowing Aurumin to unlock value from the Mt Dimer Mining Tenements on completion and have continued upside exposure with the royalty. I look forward to Beacon putting Mt Dimer into production and processing the ore at Jaurdi. We still see plenty of upside potential at Mt Dimer and we are maintaining the exploration ground around the Mining Tenements and in the wider area. Aurumin managing director Brad Valiukas
The deal with Beacon will also allow Aurumin to focus its attention on the company’s Sandstone project in WA’s Mid West region, which holds a mineral resource of 881,300 gold ounces.
The company officially acquired the project in March last year after striking a $12 million cash and scrip deal with Middle Island Resources in 2021. Following a successful reverse-circulation (RC) campaign, it was able to include an additional 97,000 ounces at the site.
In July, Aurumin revealed it had picked up two new exploration licence applications next door to Sandstone with the potential to discover previously unknown areas of gold mineralisation. The company is now clearly building a better financial position that will allow it to get to work on its existing ground and new gains.
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