Meteoric Resources scoops up ‘incredibly significant’ WA gold opportunity with Palm Springs acquisition

Meteoric Resources (ASX: MEI) emerged from a self-imposed trading suspension this morning with news it was acquiring the Palm Springs gold project and historic Butchers Creek mine in Western Australia, which managing director Dr Andrew Tunks has described as an “great opportunity” for the company.

Speaking with Small Caps, Dr Tunks said he was very “bullish” on the prospects the project presented.

He pointed out that no modern exploration had been undertaken at the project since 1997 when the mine was closed.

Since 1997, Dr Tunks noted Palm Springs had been in private hands and the available data on the project had to be identified in paper archives.

As part of the acquisition, Meteoric will purchase 100% of Horrocks Enterprises and Kimberly Resources – the project’s current owners.

In consideration for the assets, Meteoric will issue the vendors $1 million in cash and shares – comprising $750,000 cash and 12.5 million shares at $0.02 each.

To fund the acquisition, Meteoric is undertaking a $1.44 million placement via the issue of 90 million shares at $0.016.

Palm Springs gold project

Palm Springs is about 30km from Halls Creek in WA’s Kimberley region.

Historic mining at the Butchers Creek open pit gold mine produced 52,000 ounces of gold at 2.1 grams per tonne.

Mining stopped in the late 1990s due to the historically low gold price.

Previous drilling beneath the Butchers Creek open pit uncovered numerous broad high-grade intercepts.

Better results were 68m at 2.5g/t from 44m; 19m at 8.8g/t gold from 56m; 50m at 3.31g/t gold from 50m; and 6m at 21.2g/t gold from 60m.

All-up, Palm Springs includes three mining licences, four exploration and seven prospecting leases.

The project covers 12,500 hectares and hosts more than 60 known gold occurrences outside of Butchers Creek. Also, 20km of prospective strike has been firmed up across the tenements.

Northern Star’s maiden gold resource

Dr Tunks also pointed out that Northern Star Resources (ASX: NST) had firmed up a historic resource on the Golden Crown and Faugh-A-Ballagh prospects within the project, with better drill results from these targets comprising 0.8m at 501.1g/t gold from 23m; 2m at 174.7g/t gold from 12m; and 5m at 4.9g/t gold, including 0.4m at 47.2g/t gold from 126.6m.

He told Small Caps this was Northern Star’s “first ever resource” back when it had a market cap of around $10 million.

Golden Crown and Faugh-A-Ballagh are about 4km north-east of Butchers Creek.

Combined, the prospects host a historic resource of 323,000t at 3.2g/t gold for 28,000oz.

Acquisition rationale

When undertaking due diligence into Palm Springs, Dr Tunks said the company had to work through paper drill section data in detail.

He said this process highlighted to him the “incredibly significant opportunity” the project poses to the company.

“It represents immediate drilling targets beneath a previously producing gold mine, while also encompassing substantial brown fields exploration targets along 20km of prospective strike.”

“Importantly, the project is ideally situated, only 30km south-east of Halls Creek with excellent road access, has known metallurgical recoveries of 90% from a standard carbon-in-leach circuit and granted mining leases covering the main zones of mineralisation at Butchers Creek.”

When mining was underway at Palm Springs, a 500,000tpa conventional plant had been constructed along with a 9Mt tailing storage facility, diesel power station and 75-man accommodation camp and offices.

The plant processed ore from the Nicholas Find mine, which has now been restarted under Pantoro’s (ASX: PNR) ownership.

Although the plant was removed, the concrete footings, terraced working and lay down areas remain.

Dr Tunks told Small Caps the company was “delighted” to be back exploring in WA.

He noted securing Palm Springs provided the company with a more diversified portfolio.

Advancing Palm Springs

Meteoric’s exploration team is already planning drilling programs for the 2020 and 2021 exploration seasons at Palm Springs.

These programs will confirm historic results and test extensions to known zones.

Additionally, new targets will be firmed up for drill testing.

Part of the work will be to upgrade historic resources to JORC compliance.

Juruena remains a priority

Although diversifying into Palm Springs brings Meteoric with more opportunities, Dr Tunks said that the company’s Juruena project in Brazil remains a priority with a 4,000m drilling campaign kicking-off earlier this month.

One hole has already been completed and a second is underway.

“We are thrilled to back on the ground at Juruena and the team is champing at the bit to see what the 2020 program has in store for us.”

This year’s drilling at Juruena aims to “significantly increase the size and confidence” in the existing resource which totals 1.282Mt at 6.3g/t gold for 260,900oz.

“I look forward to progressing our 2020 exploration programs concurrently at both our Australian and Brazilian assets,” Dr Tunks added.