Companies:

 

Articles:

 
Mining

Mt Gibson Iron Moves into Gold with Central Tanami Acquisition from Northern Star

Go to Colin Hay author's page
By Colin Hay - 
Mt Gibson Iron ASX MGX NST TAM Gold Central Tanami Acquisition Northern Star
Copied

Mount Gibson Iron (ASX: MGX) is looking to add gold production to its portfolio with an agreement signed to acquire a 50% interest in the Central Tanami Project Joint Venture (CTPJV) from Northern Star Resources (ASX: NST).

The iron ore company will pay $50 million for the interest in the CTPJV and a number of adjacent wholly-owned exploration tenements in the Northern Territory.

The other party in the CTPJV is Tanami Gold (ASX: TAM), with Hong Kong-listed resources investment group APAC Resources a major shareholder in both Mount Gibson and Tanami Gold.

‘Compelling Opportunity’

“This acquisition represents a compelling opportunity to enter the gold sector at an attractive price, with the sector having strong fundamentals,” chief executive officer Peter Kerr said.

“Involvement in the Central Tanami project provides Mount Gibson with an opportunity to leverage the success of its Koolan Island iron ore operation to establish the foundations of a gold production business,” he said.

“Given the substantial work [already] undertaken by the CTPJV, we intend to work with Tanami Gold to fast-track technical studies to position the project for a development decision within the next 12 to 18 months.”

“In the interim, we will remain a close observer of the work being undertaken in accordance with the JV schedule approved by Tanami Gold and Northern Star, including the resource definition drilling programs presently underway.”

Attractive Multiple

Mr Kerr said Mount Gibson was making the acquisition at an attractive resource multiple of $61 per ounce for a 50% interest in the CTPJV’s JORC 2012 mineral resources, and $38 per ounce inclusive of the historical (JORC 2004) estimate of mineral resources.

Comprising more than 2,100 square kilometres of mining and exploration tenements, the CTPJV hosts JORC 2012 mineral resources of 13.8 million tonnes at 3.6 grams per tonne gold for 1.6Moz of contained gold.

There is a historical (JORC 2004) estimate of 11.2Mt at 2.7g/t gold for 1.0Moz of contained gold and work is currently underway to update the historical estimates to JORC 2012 compliance.

The project also offers the potential for a fast-track development option via a non-operating, 1.2Mtpa carbon-in-leach processing plant, and features other existing infrastructure including haul roads, an accommodation camp, bore field and gravel airstrip.