Intermin Resources Ltd (ASX:IRC) securities have rocketed 12.5% on the company inking a deed with Focus Minerals Ltd (ASX:FML) (FRA: FZA) to grab the 2.1 million ounce Coolgardie Gold Project and shuttered Three Mile Hill processing plant in Western Australia for $40 million cash and scrip over a 3.5-year period.
The deed gives Intermin five months to finalise a formal transaction and obtain the necessary approvals for the proposed project acquisition.
Intermin is merging with fellow Kalgoorlie gold player MacPhersons Resources Limited (ASX:MRP) (FRA:9PR) to form an entity set to be named Horizon Minerals Limited.
The merging companies already have JORC gold resources totalling a collective 1.19 million ounces which would be further built on by the Coolgardie project acquisition.
Focus’ Coolgardie project has a quoted mineral resource estimate of 27.3 million tonnes grading 2.4 g/t gold for 2.13 million ounces.
Adding Coolgardie to the mix would put gold resources for the new Horizon Minerals at 3.32 million ounces.
Coolgardie project’s quoted ore reserve estimate is 1.6 million tonnes grading 3.2 g/t gold for 171,000 ounces.
The Three Mile Hill processing plant attached to the project is on care and maintenance and has a 1.2 million tonnes a year capacity and a significant amount of associated open cut, underground and operations infrastructure.
Two deposits at Coolgardie are the Bonnie Vale underground discovery 10 kilometres north of Coolgardie township and the Brilliant open cut and underground project in the Coolgardie area.
Bonnie Vale has a quoted mineral resource estimate of 205,000 ounces grading 6.8 g/t gold and an ore reserve estimate of 124,000 ounces grading 6.2 g/t.
Brilliant has a quoted mineral resource estimate of 475,500 ounces grading 2.5 g/t gold.
Intermin managing director Jon Price highlighted the potential value of the project to the company and proposed new Horizon entity, saying: “The potential consolidation of the Intermin and MacPhersons assets with the Coolgardie Gold Project would be a natural fit.
“(It would deliver) additional high-grade open cut and underground ore sources to the base load Boorara project and Intermin’s satellite projects, as well as a conventional 1.2 million tonnes per annum processing facility.
“We look forward to working with MacPhersons and Focus on progressing these transactions and embarking on an exciting new chapter for all shareholders and the regional communities in which we operate.”
MacPhersons' Boorara project is a 507,000-ounce deposit 10 kilometres east of Kalgoorlie-Boulder.
Further infill and extension drilling is planned in 2019 for the very large gold system to test the potential to provide baseload feed for a processing facility.
Intermin must pay a $300,000 exclusivity deposit to Focus within seven days.
Focus will adopt a no-shop, no-talk approach to the project over the five-month exclusivity period but will present all competing proposals to Intermin for matching rights over the period.
The deposit will be used as part of Intermin’s Coolgardie $40 million purchase price if the companies reach an agreement.
The agreed sum consists of $31 million cash and $9 million of fully-paid ordinary shares, both payable on a predetermined three-tranche schedule.
If the companies execute the project buy-up, Intermin will use it to continue to advance its growth strategy, backed by the $7.1 million in cash and investments it holds.
It expects to draw on the support of a strong shareholder base as it advances its plans and raise capital when necessary to advance its agenda.