BMG Resources (ASX: BMG) has lined up three new Western Australian projects that will transform the company into a gold explorer after giving up its battery minerals ambitions.
The company today emerged from a trading halt to announce it has signed a binding deal to acquire all of the shares in Oracle Mining, which holds 100% interests in three “high growth” gold projects – the “drill-ready” Abercromby project in Wiluna, and the Invincible and South Boddington projects, located near large gold deposits.
The transaction will be based on BMG raising $4 million via a placement and share purchase plan and issuing about 40% of BMG’s total issued shares to existing Oracle shareholders.
The move comes three months after BMG announced it had terminated a joint venture deal with Lithium Chile, which covered three lithium brine projects in South America’s Lithium Triangle, and decided to “focus its efforts elsewhere”.
BMG has outlined a work program for the gold projects following completion of the acquisition, including resource drilling at Abercromby with a view to announcing a resource estimate “as soon as practicable”.
The first of the three projects is Abercromby, a high-grade gold discovery located in one of WA’s most significant gold-producing regions, the Wiluna Belt.
The project comprises two granted mining leases but has remained relatively underexplored and undeveloped for more than two decades, “having sat idle in the portfolio of a base metal major”, according to BMG.
The project contains multiple historic thick high-grade gold intercepts including 57.5m at 5.73 grams per tonne gold from 80m and 30m at 10g/t gold from 164m.
BMG said the shallow mineralisation supports the potential for open pit mining if exploration proves successful and the project is close to plants operated by Wiluna Mining (ASX: WMX) and Northern Star (ASX: NST).
Upon completion of the acquisition, BMG plans to begin a 5,000m reverse circulation and diamond drilling program at Abercromby to progress towards a maiden resource.
The other two projects being acquired through Oracle include the Invincible gold exploration project, located in WA’s central Pilbara and immediately along strike Calidus Resources’ (ASX: CAI) 1.495 million-ounce resource currently in development, and South Boddington, located along strike from the giant 40Moz-plus Boddington gold deposit.
Capital raising and acquisition terms
Under the terms of a heads of agreement, BMG will acquire 100% of Oracle for 90 million consideration shares at $0.05 per share (following a proposed 10:1 share consolidation).
The acquisition is conditional upon BMG raising $4 million in new equity capital, which will consist of a $3 million placement to sophisticated investors and a $1 million share purchase plan to existing shareholders.
BMG said it has already received commitments to raise $3 million through the issue of 60 million shares at $0.05 each and the additional $1 million will be raised through the issue of a further 20 million shares at the same price.
BMG said the net proceeds of the placement and pending share purchase plan will strengthen its balance sheet and “provide important funding to acquire and develop a world-class gold portfolio”.
A general meeting is currently proposed for 30 September to obtain shareholder approvals with completion of the transaction anticipated in early October 2020.
Upon completion of the acquisition, Oracle shareholders will hold about 40% of BMG.
Move away from lithium
In May, BMG announced its decision to terminate its involvement in the Lithium Chile joint venture in light of the coronavirus pandemic and the lack of significant lithium brine results arising from work undertaken.
The company said a review had determined that its resources are “better deployed elsewhere”.
BMG still retains its interest in the Treasure copper-gold-cobalt-nickel project in Cyprus.