BMG Resources Ltd (ASX:BMG) has signed a binding Heads of Agreement (HOA) to acquire Oracle Mining Ltd, which includes three highly prospective Western Australian gold projects.
The HOA is in consideration for the issue of shares in BMG, equal to around 37% of the total issued shares after completion of the acquisition along with a $4 million capital raising.
BMG shares have surged almost 86% on the news to 1.3 cents.
“Three high-growth projects”
Managing director Bruce McCracken said: “In 2020, the BMG board has evaluated a range of new investment opportunities, actively focusing on those that can strengthen our exposure to minerals with favourable market dynamics in attractive jurisdictions.
“Now that we have completed a comprehensive process reviewing several assets, we are delighted to have secured Oracle Mining and its three high-growth gold projects in Western Australia.”
Abercromby Project “a cornerstone asset”
McCracken continued: “The cornerstone asset in this transaction is the Wiluna-located Abercromby Project. Abercromby hosts a high-grade gold discovery in one of Western Australia’s most significant gold producing regions.
“Our immediate focus at Abercromby is on a number of existing thick high-grade gold intercepts, as well as down-dip and infill drilling that we intend to leverage with the aim of progressing towards a maiden resource.”
McCracken continued: “The scale potential of the Invincible Project is another exciting aspect of this acquisition, as it sits on strategic ground in an underexplored area of Central Pilbara which hosts multiple small historic mines and follows along strike from Calidus Resources' large Klondyke deposit.
“Rounding out our acquisitions, the South Boddington Project presents an outstanding opportunity for BMG to make a significant new gold discovery in the underexplored areas of a world-class gold belt, located just 150 kilometres southeast of Perth and along strike from Newmont’s giant Boddington gold deposit.
“As a further endorsement of the quality of these assets, we are excited to welcome key members of the Oracle team onto our register as major shareholders and, on completion of the transaction, onto BMG's board as non-executive directors.”
Capital raising
Drilling is planned to begin at the Abercromby Project once the acquisition is completed and capital raise is finalised.
The fundraising exercise is aimed at raising $4 million at $0.005 per share, or $0.05 per share following a proposed 10:1 share capital consolidation.
This proposed raising consists of a $1 million share purchase plan offer to existing shareholders and a $3 million placement to sophisticated investors for which commitments have already been received with completion subject to shareholder approval.