Cyclone Metals Ltd (ASX:CLE) has entered into a binding term sheet with Grand Port Resources Pty Ltd to acquire 100% of the issued share capital of Grand Port, which owns and has applications over a diversified portfolio of gold, copper, nickel and PGE assets in New Zealand.
The acquisition is aligned with Cyclone’s strategy to acquire and invest in strategic, value-add projects around the world.
Further, the company also proposes to raise $500,000 via the issue of 100 million shares to fund the initial work on Grand Port’s projects, acquisition costs and general working capital.
Grand Port’s projects covering 1,140 square kilometres are all either near operating mines and facilities, or other resources companies.
The projects are: Macraes South, Muirs, Mareburn, Longwood Range, Waikerikeri and Drybread, and all are considered underexplored by modern exploration methods.
Settlement of the acquisition is expected to complete in the coming weeks.
Add significant value
Cyclone executive director Tony Sage said: “Grand Port owns an impressive portfolio of brownfield precious and base metal assets in New Zealand, which we believe, we can add significant value through our hands-on approach and strong contacts in-country.
“Other ASX companies are experiencing success in New Zealand and we look forward to developing these assets in the coming months to realise value for Cyclone’s shareholders.”
Acquisition terms
The material terms of the acquisition include:
➢ Consideration: Cyclone will issue Grand Port or its nominees, 900 million fully paid ordinary company shares in two tranches. The first tranche of 500 million shares will be issued under its existing placement capacity under Listing Rule 7.1 while the second tranche comprising 400 million will be issued following shareholder approval;
➢ Conditions precedent: Completion of due diligence on Grand Port’s business, assets and operations, including but not limited to its mineral tenements, expected to be within 30 days;
➢ Board nominee: Grand Port will have the right to nominate one person to the board of Cyclone; and
➢ Shareholder approval: Cyclone shareholders will have to approve the acquisition and the issue of Tranche Two shares. The general meeting is expected to be held in April 2022.
Completion of the acquisition is also conditional upon:
➢ Cyclone receiving written evidence that the relevant minister has consented to the acquisition proceeding pursuant to the Overseas Investment Act 2005 (NZ);
➢ Cyclone receiving written evidence that the relevant minister has consented to the change in effective control of Grand Port Resources Pty Ltd pursuant to the Crown Minerals Act 1991 (NZ); and
➢ Other conditions considered customary for a transaction of this nature.
Mineral resource estimate
Grand Port’s projects comprise of a portfolio of highly prospective precious and base metals projects on the North and South Islands of New Zealand.
Following completion of the acquisition, Cyclone plans to undertake a maiden JORC-compliant mineral resource estimate at Muirs and commence first-pass drilling at Muirs and Mareburn.
South Island portfolio
The Mareburn Gold Project and Macraes South Gold Project (granted) covers 464 square kilometres within the Otago Goldfield of the South Island, which has 10 million ounces of proven historical gold production.
Mareburn sits 8 kilometres north of the producing Macraes Gold Mine and processing plant, New Zealand’s largest producing gold mine, and around 2 kilometres from the Coronation open pit.
Macraes South is contiguous to the south of the Macraes Gold Mine and processing plant.
These areas have been significantly underexplored using modern exploration techniques.
The Mareburn Gold Project contains a number of initial walk-up extension drill targets to previous results :
➢ 10 metres at 2.4 g/t gold from 38 metres, including 3 metres at 7.1 g/t from 38 metres;
➢ 10 metres at 1.99 g/t from 2 metres, including 6 metres at 3 g/t from 5 metres; and
➢ 2 metres at 3.04 g/t from 2 metres.
The Drybread-Waikerikeri Gold Project (application pending) covers around 198 square kilometres and crosses over Santana Minerals (ASX:SMI) Ltd's Bendigo-Ophir Project in Central Otago and contains historical alluvial workings contiguous to that project.
The area has been underexplored for hard rock potential with no primary gold exploration undertaken.
North Island portfolio
The Muirs Reef Gold Project (application pending) covers 52.6 square kilometres and is close to Oceania’s Hauraki Gold Field with 45 million ounces proven historical gold production.
With the same geology as Hauraki, Muirs Reef has a non-JORC foreign inferred resource estimate of 222,000 ounces at 1.34 g/t gold resource, and silver yet to be estimated.
Muirs Reef is around 100 kilometres from the Waihi Gold Mining operations and is drill target ready.
The Muirs Gold Project, contains a non-JORC foreign inferred resource estimate of 222,000 ounces gold at 1.34 g/t, with significant exploration upside.
Historic drilling results include:
➢ 11.0 metres at 11.0 g/t gold from 48 metres including 2.0 metres at 38.4 g/t;
➢ 0.7 metre at 17.0 g/t from 92.2 metres;
➢ 14.0 metres at 2.76 g/t from 54 metres;
➢ 12.0 metres at 2.36 g/t from 79.0 metres.
➢ 9.0 metres at 2.70 g/t from 29.0 metres; and
➢ 28.0 metres at 1.57 g/t from 48.0 metres.
New Zealand – premier investment destination
New Zealand is now a premier investment destination for resources with successful explorers and new mines being approved.
In addition to the current projects, Grand Port will make applications for lithium projects in New Zealand to further diversify the portfolio with this strategic mineral.
Placement details
Prior to completion of the acquisition, Cyclone will undertake the placement of 100 million shares to sophisticated and professional investors, at an issue price of $0.005 per share, with one free attaching option for every four shares at an exercise price of $0.006 expiring 31 March 2024.
The placement shares will be issued under the company’s existing placement capacity under Listing Rule 7.1A and the Placement Options using the company’s capacity under Listing Rule 7.1.