As part of Alt Resources (ASX: ARS) fast-track to production strategy, the company has clinched a mining services agreement with Blue Cap Mining Pty Ltd to develop the Tim’s Find tenements within the company’s wider Mount Ida project.
Under a non-binding term-sheet, Blue Cap will provide mining, transport, processing, drill and blast and other associated services to Alt.
As part of the agreement, Blue Cap will provide Alt with a $3 million working capital facility to help develop the initial mining operation.
This will continue until gold sales allow full payment of all Alt’s outstanding invoices.
Within six months of the first drawdown, Alt must repay the working capital facility in full.
Additionally, Blue Cap will receive a $10,000 establishment fee upon document execution. Alt will also issue the service company 50 million shares on signing of formal documentation. These shares will be issued in exchange for $1.6 million of credit toward the total contracted works.
The shares will have an issue price of $0.032 and a voluntary restriction period of 12 months from issue.
Alt chief executive officer James Anderson said the company was pleased to have secured an agreement with Blue Cap, which is a private and well-respected mobile mining service group.
“In the current high gold price environment, developing Tim’s Find into a small-scale mining operation with the potential to generate free cash is a logical step for Alt and in line with the corporate strategy to become a gold producer and provide non-dilutive working capital for the company,” Mr Anderson explained.
“The planned mining operation is reasonably uncomplicated with Tim’s Find being located on a granted mining lease, the ore is oxide and at surface in a planned shallow open pit environment with a reasonable grade,” he added.
Part of the Mt Ida project in WA’s eastern goldfields, Tim’s Find has previous returned notable drill intersections of 10m at 6.32 grams per tonne gold from 14m, including 2m at 21.53g/t gold from 20m.
The broadest intercept was 17m at 3.63g/t gold from 8m, including 2m at 24.68g/t gold from 28m.
Meanwhile, the highest grade interval was 1m at 30.40g/t gold from 19m.
Alt completed a 2,500m reverse circulation drilling program at Tim’s Find last month and is expecting assays from this campaign to be delivered in the coming weeks.
Tim’s Find has a current resource of 360,000t at 2.6g/t gold for 30,096 ounces, with the deposit having the advantage of sitting on a granted mining lease.
According to Alt, subsequent work on Tim’s Find following the July scoping study has led the company to believe the deposit provides an opportunity for early cashflow without the initial capital required associated with the processing plant included in the study.