Venus Metals partners with Rox Resources at Youanmi gold mine

Australian mineral explorer Venus Metals (ASX: VMC) has joined forces with fellow junior Rox Resources (ASX: RXL) in what it describes as a “transformational deal” to unlock the potential of the historic 1.2-million-ounce Youanmi gold mine in Western Australia.

The companies today announced the signing of a binding term sheet, which will enable Venus to settle on its purchase of the mine and form three joint ventures with Rox to undertake aggressive exploration of the project area.

In May last year, Venus made an option-to-purchase deal with Youanmi owner Oz Youanmi Pty Ltd to buy up the gold mine plus associated infrastructure including the mine village.

Under this latest deal, Rox will enter into a joint venture with Venus to acquire a 50% interest in the mine with the ability to bump its stake up to 70%. It will also take over as the manager of the project.

In addition, Rox will fund and undertake an aggressive near-mine exploration program and pre-development work at Youanmi immediately following the completed transaction.

The company will also enter into other joint ventures with Venus to jointly explore the broader Youanmi shear zone, including a significant tenure position along strike from the Penny West gold deposit. Rox will have the right to earn 50% interests in the gold rights on these tenements.

Joint venture terms

Rox will earn its initial 50% stake in the Youanmi gold mine joint venture by paying Venus $3 million in cash consisting of: a $250,000 exclusivity fee already paid; $2.55 million on the completion date; and issuing 25 million Rox shares at $0.008 per share to Venus.

Rox will also solely fund $2 million towards drilling programs and other relevant on-ground expenditure within the joint venture tenements and cover costs of holding the project.

The company can increase its stake to 70% in the joint venture on or before 30 June 2021 by making a further payment to Venus of $3 million either in cash or, at Venus’ election, as $1.5 million in cash and $1.5 million in Rox shares.

Under the two additional joint ventures for 50% of gold rights in Venus’ broader tenement package, Rox will be required to solely fund $1 million towards exploration.

Venus will be the manager of these joint ventures and will retain 100% of its interest in all other minerals in these tenements including vanadium, lithium, zinc, cobalt and base metals.

Venus managing director Matthew Hogan said joining forces with Rox is a “great deal” for the company as it enables it to arrange the settlement of the Youanmi gold mine acquisition with minimal dilution to Venus shareholders and mitigates risk.

Also commenting on the deal, Rox chairman Stephen Dennis said the Youanmi acquisition was “consistent with the company’s stated objective of acquiring near-production assets within its financial capacity”.

Youanmi history

Located 480km northeast of Perth in Western Australia, the Youanmi gold mine is currently on care and maintenance.

Gold was first discovered in the area in 1901. The broader Youanmi Mining Centre produced an estimated 667,000oz of gold (grading at an average 5.47 grams per tonne of gold) during intermittent periods of operation from 1908 to 1997.

Most of the gold was producing from the Youanmi mine with an estimated 96,000oz produced from Youangarra, Penny West, Columbia-Magenta, Currans and other minor prospects.

Last year, a JORC 2012 compliant mineral resource estimate was announced for the gold mine of 12.4 million tonnes at 2.97g/t gold for 1.19Moz gold.

According to Venus, considerable potential remains within the Youanmi project to further define additional gold resources, both near the surface and underground.

Five separate open pits occur over a 2km strike with the gold mineralisation occurring in multiple shear zone lodes throughout.

“At the current gold price, there’s potential to develop a super pit to connect the separate open pits not one big open cut [operation],” the company stated.

According to Venus, significant drill intersections from some 200m below the defined underground resources also indicate that the main ore shoots may have strong continuity down plunge.

Exploration plans

A reverse circulation drilling program has been scheduled to commence on the joint venture mining leases as soon as all statutory approvals have been received and after the transaction completion date, Venus stated.

“Significant drill testing programs will commence as soon as possible on numerous geochemical and EM anomalies identified along strike to the north and south from the recent Penny West discovery site by Spectrum Metals,” Venus managing director Matthew Hogan said.

“We look forward to realising the potential we believe exists at Youanmi,” Rox chairman Stephen Dennis added.