Venus Metals to buy Youanmi Gold mine and St Clair-contested tenements

Junior explorer Venus Metals (ASX: VMC) has gained on news it has snapped up two options that will allow it buy up the historical Youanmi Gold Mine which its tenements surround in Western Australia, plus associated infrastructure including the mine village.

The mine, which is 480km northeast of Perth, has been closed for 21 years, but produced 667,000 ounces of gold at 5.42 grams per tonne between 1908 and 1997.

Venus called the options a “transformative deal” and highlighted the remaining “substantial” indicated and inferred resources at Youanmi.

The deep, underground JORC 2012 code-compliant indicated and inferred resources are partly refractory and assessed as 2.4 million tonnes graded at 8.5g/t gold for 657,900oz.

Youanmi’s near-surface JORC 2004 indicated and inferred resources are found in four areas and contain 5.2Mt of 1.5g/t gold to serve up another 245,700oz.

Venus managing director Matt Hogan heralded the value of the deal for the company’s shareholders.

“This deal for Venus is transformational because we stand to acquire a large high-grade established gold resource base to complement our extensive exploration holdings at Youanmi greenstone belt. Acquiring all the infrastructure gives us a terrific platform to expand our activities,” he said.

“We believe shareholders will be well rewarded in the future from the completion of this transaction and as Venus progresses the gold mine back into production.”

When the Youanmi mine closed its doors in 1997, the gold price was about A$400 an ounce. It’s now sitting around A$1760/oz, an increase that materially changes the estimated value of gold in the ground.

Surrounding gold tenements

Venus’ tenements completely surround Youanmi, and it controls 40km of land along strike. As Venus reported in March, it has identified multiple mineralised zones at its Youanmi project, which includes the Estonia and Stone Tank Bore prospects, and intersected cobalt and nickel across its portfolio.

The company has also identified electromagnetic targets along Youanmi Shear to the south.

Venus today said its Youanmi area tenements include a 10km-by-7km zone that covers and surrounds the mine and its extensions.

The company tipped the options presented Venus with “an excellent advanced opportunity with significant open-cut gold and high-grade underground-gold resources with near-term cash flow potential”.

After former owner Gold Mines of Australia closed underground and surface operations at the mine in November 1997, it has changed hands a number of times with other previous owners including Aquila Resources, Goldcrest Mines, then an Apex Minerals asset before being snapped up by unlisted Chinese-investors backed OZ Youanmi Gold.

Transaction terms

Under the Youanmi deal, a A$100,000 payment will give Venus the right to carry out due diligence on the holding company Youanmi Gold and its tenements. If Venus proceeds with the purchase, it can snap up the company for A$4.9 million cash before 30 June 2019 or assign the option to another party.

Alternatively, Venus can pay A$1.9 million cash and the remaining A$3 million in its shares.

Venus hopes to have the transaction executed by 31 December 2018.

A number of Youanmi Gold’s tenements are subject to Wardens Court forfeiture applications from St Clair Resources, so Venus has also picked up a A$100,000 option to those tenements from St Clair. At Venus’ request, St Clair will withdraw the applications until 30 June 2019, with Venus also hoping to make a call on this second option by end of calendar year 2018.

Youanmi is about 20km northeast of Metals Australia’s (ASX: MLS) three Manindi mining leases, in WA’s mid-west, where the lithium-ion battery metals explorer collected ore samples able to produce lithium concentrate grading up to 3.05%, recovering up to 77% lithium from 30% of the mass feed.

By late afternoon, Venus shares were up 16% to A$0.145 after experiencing an A$0.165 intraday high.