Classic Minerals inks major funding agreement for Kat Gap gold project development

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By Colin Hay - 
Classic Minerals ASX CLZ Kat Gap funding AuResources

Classic Minerals (ASX: CLZ) has signed funding agreements totalling up to $91.8 million to support its development of the Kat Gap gold project in Western Australia.

An initial binding terms sheet signed with Swiss-based AuResources AG will provide $15.3m first-tranche funding.

The payment will help fund increase production capacity at Kat Gap and development of the Lady Magdalene and Lady Ada deposits at the company’s Forrestania gold project.

The initial funding will support an expansion of plant capacity, with $7.3m to go towards purchasing items such as a ball mill, inline pressure jig, power plant, tailings dam and leaching circuit.

It will also be used to defray operations costs at Kat Gap.

The AuResources term-sheet also has an option for Classic to receive an additional $76.5m in five tranches of up to $15.3m each for further development and operational spending at Kat Gap and Forrestania.

Funding partner

Luxembourg-based Black Manta Capital Partners (BMCP) is supporting AuResources’ funding obligations.

Over the past three years, BMCP has been directly involved in providing total funding of over $769m.

Classic Minerals chair John Lester said this round of funding puts the company firmly on the international scene.

“We will now have the capacity and capability to deliver value to AuResources, Black Manta Capital and our shareholders.”

Full scale production

Classic Minerals has continued to make good progress in its advance to full-scale production at Kat Gap.

Most of its recent work has focused on trial mining and milling activities, including the calibration of the processing facility to capture data enabling refinement of the gravity circuit operation.

Classic is looking to trial-mine a good portion of the oxide component of the indicated resource down to a depth of 45 metres during the first quarter of 2024.

It is also gathering data to publish an ore reserve, with a focus on converting its indicated resource numbers.

Trial-mining activities

To assist with this, the trial-pit will be mined and processed to allow accurate reconciliation of the tonnes, grade and recoverable ounces of gold from the indicated block model.

The trial will also provide the geological and engineering teams with the ability to measure structural data first-hand from the walls and floor of the trial-pit.

The design of the trial-pit will allow direct structural measurements to be taken of exposed gold mineralisation.

Trial-mining may also shed light on the presence and attitude of additional lodes that could be targeted for increases to the overall resource, which in turn could have a positive effect on project economics.