NickelX expands WA portfolio with acquisition of Penny South gold project

NickelX (ASX: NKL) has continued to expand and diversify its global minerals portfolio with the signing of a binding agreement to acquire 100% of the promising Penny South gold project in Western Australia.

Penny South is located just 550 metres south of the Penny West/North gold mine owned and operated by Ramelius Resources (ASX: RMS), which is estimated to contain 440,000 tonnes of ore at 22 grams per tonne of gold for 320,000 ounces.

Previous exploration has identified that Penny South has an approximately 2.5km strike extension of the Penny West Shear due south of Ramelius’ deposits.

Promising gold asset

“We are extremely pleased to have reached an agreement for the acquisition of the Penny South project,” managing director Peter Woods said.

“The addition of this exciting gold exploration asset next door to one of the highest-grade gold mines in production in WA in a district seeing current mergers and acquisitions activity greatly enhances our existing portfolio.”

“Given the minimal deeper drilling and lack of diamond drilling, it is the company’s view there may be substantial value to be unlocked at depth and we are eager to execute a path forward to test the theory as the momentum for gold continues.”

Data review

Once the deal is complete, the company and its consultants will compile and review all geological, geochemical and historical drill hole data with the aim to define high-priority targets.

They are especially seeking potential targets at depths greater than 80m below the surface and NickelX says it will also investigate the use of electrical geophysics in the search for Penny-style quartz-sulphide lodes.

Historical drilling at Penny South has encountered various significantly anomalous intersections of gold mineralisation, which are currently being compiled and assessed.

Over 1,000 drill holes have been completed within the Penny South licence—mostly rotary air blast and aircore holes, with reverse circulation drilling accounting for only around 3% of the drill holes.

Transaction terms

NickelX will acquire a 100% interest in Penny South from Aurum Resources (ASX: AUE) for $60,000 in cash and the issue of 3 million NickelX shares at a deemed price of $0.02.

A deferred cash consideration of $500,000 will be paid upon the achievement of at least a 50,000oz gold resource with a grade of at least 1g/t and a further $500,000 will be paid for every additional 50,000oz gold with a grade of at least 1g/t within five years of the acquisition being completed.

The company has also agreed to enter into a deed of assumption in respect of an existing 1% royalty on the Penny South tenement.

Shareholder approval for the deal will be sought at the company’s upcoming extraordinary general meeting.