Mutiny Gold to move to 70% ownership of Gullewa gold project, funds raised at premium

Mutiny Gold (ASX: MYG) has taken another major step towards full ownership of the Gullewa Gold Project in Western Australia, moving to a 70% interest with a $2 million payment.

Providing a major vote of confidence in the company's operation and gold production goals starting in 2012, funds were raised at a premium to the current share price.

Mutiny placed around 18.2 million new shares to New York based institutional and sophisticated investors at $0.096 to raise $1.75 million.

John Greeve, managing director, commented on the placement and said “We are delighted with the support we have received from offshore investors, in spite of the uncertainties that exist in global equity markets.

“While we held back some raising capacity in anticipation of an improvement in market conditions, and had offers of convertible notes, continued capital market uncertainty has made it prudent to accept this strategic placement.

"Furthermore, this additional capital ensures that Mutiny can continue its exploration activities at Deflector with the next exploration program scheduled to commence in late October.”


Gullewa hosts Deflector - annual 100,000 gold ounce production goal

What is so important about Gullewa is that the project hosts the Deflector deposit, which already holds some resources in the higher confidence categories, with Measured 130,000 gold ounces and 12,000 tonnes of copper, and Indicated 105,000 gold ounces and 4,500 tonnes of copper.
 
The deposit contains a total resource of; 3.4 million tonnes at 5.4g/t gold, 4.7g/t silver and 0.8% copper for 590,000 gold ounces, 510,000 silver ounces and 25,500 tonnes of copper.
 
Mutiny has an exploration target of between 1.65 million to 2.5 million gold ounces.
 
Mutiny has said that the company has resolved to expand the scope of the Feasibility Studies to incorporate a re-assessment of Deflector, which is now expected to support production in the order of 100,000 to 120,000 gold ounces annually when fully ramped up.
 
The reason is exploration has uncovered high grade intercepts in multiple locations, which predicate likely extensions to the planned open pit and, also, importantly, confirm the down plunge continuity with depth of high grade shoots that can be included in underground mine planning
 
The results provide further confirmation of the exploration potential of the Deflector Corridor but they are likely to be just the tip of the iceberg as far as upside in exploration target and production ounces.
 

Scoping Study - Recap
 
- IRR of 83%
- NPV of $187 million – likely to increase significantly
- Cash surplus of $427 million after payback of capital costs
- Capital cost of $52 million and State Royalties including A$19 million for plant upgrade and A$12 million for the first three months working capital
- Annual production of 50,000 ounces gold, 2,000 tonnes copper and 34,600 ounces silver
- Cash costs over first ten year life of mine estimated at $524 an ounce
- Contained gold ounces of 578,000 ounces (comprising 100,000 ounces open pit and 478,000 ounces underground)
- Estimated average production grade of ore ranges from 4.1g/t gold to 6.5g/t gold