Gold explorer Intermin Resources (ASX: IRC) has entered into a merger agreement with multi-commodity junior MacPhersons Resources (ASX: MRP) to create new gold producer Horizon Minerals, based in Western Australia’s goldfields region.
The “transformational” merger, subject to shareholder and court approval, will see the new entity kickstart its life with a combined estimated mineral resource of 1.15 million ounces of gold, comprised of large-scale baseload feed and higher-grade satellite open cut sources over 1100 square kilometres of the Kalgoorlie-Boulder district.
It will also inherit an extensive portfolio of highly-prospective goldfields growth assets.
Under the terms of a Scheme of Arrangement between the two companies, MacPhersons shareholders will receive one new fully-paid ordinary Intermin share for every 1.8227 MacPhersons fully-paid ordinary shares held.
At the end of the transaction – which values MacPhersons at approximately A$0.0825 per share based on Intermin’s 30 day volume weighted average price at 6 December – Intermin shareholders will hold 55% of the merged entity while MacPhersons’ will hold the remaining 45%.
MacPhersons directors have recommended shareholders vote in favour of the merger.
Open pit development
The proposed merger provides Horizon Minerals with a clear pathway to a standalone gold operation.
The new company’s combined asset base will hold approximately 562,000 ounces of existing gold mineral resources located within easy trucking distance of MacPhersons’ 507,000oz Boorara deposit which has approvals in place for the development of an open pit mine and the construction of a standalone processing facility.
The orebody at Boorara is believed to be close to surface, with low strip ratios and “excellent” metallurgy with high gravity recovery and overall recoveries of more than 90% at a coarse grind of 180 microns.
MacPhersons has previously completed more than 86,000 metres of infill and extension drilling and extended the deposit’s strike length to over 2km.
The deposit remains open to the north and at depth.
Trial mining was conducted at Boorara in 2016 to test geological modelling, mining methods and metallurgical performance.
The trial demonstrated improved grades from closer-spaced drilling and the presence of a potentially higher grade component within the global resource.
Further infill and extension drilling is planned for 2019 and the results will be used in a feasibility study as the baseload feed to underpin a standalone processing facility.
For its part in the merger, Intermin brings the Teal, Goongarrie Lady, Binduli, Anthill and Blister Dam gold projects to the table, each of which cold potentially provide +2g/t oxide and transitional feed amenable to open pit mining to supplement the baseload feed from Boorara.
The recently-completed Teal open pit, 12km north of Kalgoorlie-Boulder, demonstrates this potential, delivering approximately 22,000oz of gold grading 3.2g/t and 94% gold recovery.
A self-funded 55,000m resource extension and discovery drilling campaign during the year has to date delivered resource growth to an estimated 562,000oz of Intermin’s gold, with a fresh round of drilling at high-priority targets prioritised for the new year.
Drilling will be focussed on high-grade open cut and underground ore bodies on major shear zones for transport to the potential Boorara processing facility.
A pipeline of development projects has also been identified, including the Goongarrie Lady open pit where an earlier feasibility study produced results of approximately 12,000oz at 2.9g/t gold and $5.7 million in cashflow over a seven-month mine life.
Intermin’s newly-acquired Yarmany and Lakewood project areas provide further untested potential and will be prioritised for resource definition and drilling.
“The combination of [Intermin and MacPhersons] projects provides a strong foundation for [Horizon] to pursue an accelerated development strategy with the aim of becoming a recognised, long life, sustainable gold producer,” the companies said in a joint statement.
“[We expect Horizon] will have increased market relevance with a larger market capitalisation, stronger balance sheet, improved share liquidity and be of a scale to attract a broader investor base.”
On finalisation of the merger in mid-2019, Horizon will commence a feasibility study based on a five-year mine plan supporting a standalone carbon-in-leach processing facility, thereby avoiding the use of nearby third-party toll mills which would reduce margin and operating flexibility.
The company will hold a large portfolio of advanced and greenfields exploration assets and is expected to continue to aggressively explore for resource extensions to existing mineralisation.
It will also pursue new discoveries and review acquisitions within the region which could add value and fit with Horizon’s development strategy.
Growth opportunities will exist across commodities other than gold, through MacPherson’s 100% interest in the Nimbus silver-zinc-gold project and Intermin’s multi-commodity joint ventures including the 2.6 billion tonne Richmond vanadium project in central north Queensland.
Richmond grades 0.32% vanadium pentoxide at a 0.29% cut-off grade, making it one of the largest vanadium deposits in the world.
At midday, shares in Intermin Resources were steady at $0.145, while Macphersons Resources shares were up 2.44% to $0.084.