Alt Resources (ASX: ARS) has cemented a mining service agreement with Blue Cap Mining with the duo now inking a binding term sheet to develop and mine the Tim’s Find deposit within Alt’s wider Mount Ida gold project in Western Australia.
Today’s binding term sheet follows a non-binding agreement between the companies in October last year.
Under the binding deal, Blue Cap will provide mining, transport, processing, drill and blast and associated mining services to Alt.
Blue Cap will also provide a $1.5 million working capital facility to fund initial mining at Tim’s Find.
Alt has agreed to repay the facility within four months of first drawdown via ore sales from the operation.
Net profit from Tim’s Find will be split 34% to Blue Cap and 66% to Alt.
Additionally, Blue Cap will retain the right to subscribe for 20 million Alt shares at $0.025 each.
At Blue Cap’s discretion, the issue of shares can be in lieu of cash payments against the mining service agreement costs.
In addition to providing mining services, Blue Cap will be responsible for engaging subcontractors for ore haulage and processing. However, Alt must approve any appointment.
Blue Cap will also be granted a first ranking security over the ore extracted and processed from Tim’s Find.
Alt and Blue Cap anticipate formal documentation will be executed in the “near future”.
Tim’s Find gold deposit
After evaluating Tim’s Find, Alt said it anticipates the deposit could provide it with an opportunity for early cash flow without capital outlay for a processing plant.
The deposit is on a granted mining lease and has a measured and indicated resource of 535,000t at 2.13 grams per tonne gold for 36,7000 ounces.
In readiness for small scale mining, Alt has already secured clearing and haul road permits for Tim’s Find.
Additionally, the Bottle Creek camp extension has been completed.
Alt plans to lodge a mine plan in the “coming weeks” with actual mining to begin once regulatory approval has been received.
Tim’s Find makes up part of the wider Mount Ida gold project, which has global resources of 10.5 million tonnes at 1.54g/t gold for 519,000oz plus 3.78Moz silver.