Chase Mining Corporation Ltd (ASX:CML) has inked a conditional agreement to acquire Green Critical Minerals Pty Limited (GCM) which holds rights to acquire up to 80% of the graphite rights for the advanced McIntosh Graphite Project, Australia's third-largest ASX-listed graphite project.
This project is well advanced, holding a JORC resource of 23.8 million tonnes contained graphite, 81% of which is in the higher confidence indicated category, with more than 40,000 metres of targeted drilling and extensive metallurgic test-work completed on the project to date.
The company believes the McIntosh project offers a particularly valuable opportunity, having low impurities and low-cost, high-yield downstream processing attributes with the potential to produce high-quality graphite products in a diverse range of end-use markets.
Investors provided a vote of confidence for the move, sending securities as much as 50% higher to A$0.021, equal to the company's 12-month high and with more than 200 million shares changing hands during the day.
“Transformational acquisition”
“This is a transformational acquisition for the company, being able to secure the graphite rights (80%) to the McIntosh Graphite Project known as one of the most advanced and largest graphite resources in Australia,” Chase Mining independent directors Leon Pretorius and Julian Atkinson said.
“The McIntosh project has more than 40,000 metres of graphite-focused drilling conducted on the property and extensive metallurgical test-work providing a unique opportunity to advance a critical mineral project to development at a pivotal time where sovereign supply of graphite located in a Tier 1 mining jurisdiction is limited."
They said: “The Mcintosh flake contains a globally significant flake size endowment highly amenable to low cost, HF free (hydrofluoric acid) downstream processing.
“The company is excited to map the path towards advancing this project by revising and updating historical feasibility studies and scoping studies conducted on the concentrate processing and downstream processing respectively whilst drilling key targets which have upside to further expand on this project.”
McIntosh boasts a graphite flake size of greater than 180 Microns (80 Mesh), placing it in the top quartile for flake size distribution globally.
Another competitive advantage is the impurity profile of McIntosh graphite, which – due to impurities existing on the surface of the flake rather than trapped within it – can produce a concentrate grade of 98% total graphite content (TGC) with a high recovery rate of 93%, using standard flotation.
The graphite product can then be easily purified to nuclear grade 5N purity (99.9998%) without the use of hydrofluoric acid.
Chase intends to target the highest value graphite products in the market based on these qualities, including lithium-ion batteries, graphite foils, energy products, semiconductors, industrial diamonds, aerospace and defence applications.
Acquisition agreement details
GCM has the right to earn up to an 80% interest in McIntosh from Hexagon Energy Materials Limited as follows:
- Payment of $300,000 upon commencing the earn-in and a further $200,000 within 12 months;
- Exploration expenditure of $1 million within 12 months to earn an initial 30%;
- Exploration expenditure of $1 million within 24 months to earn 51%; and
- Exploration expenditure of $1 million within 36 months to earn 80%.
The total purchase price to acquire GCM is (all subject to 12 months escrow from issue in accordance with item 5 of Appendix 9B of the Listing Rules):
- 460 million fully paid ordinary shares;
- 100 million options (exercise price $0.015 and expiring 36 months from issue); and
- 459 million performance rights that convert to ordinary shares in three equal tranches upon satisfying performance milestones linked to substantially increasing the resources and reserves for McIntosh.
The acquisition is also conditional upon approval by CML shareholders and the completion of a capital raise to ensure CML has at least $4.5 million in cash.
CML has received firm and binding commitments for this placement from sophisticated and professional investors, intending to raise up to $3 million at $0.015 per fully paid ordinary share to support progress on the McIntosh Graphite Project, and satisfy the funding conditions for the acquisition of GCM.
Name change proposed
Chase Mining is moving to strengthen its management team, searching for experienced and dynamic executives with the skill set required to advance the project through offtake and development.
The company also intends to change its name to Green Critical Minerals – subject to shareholder approval – to reflect its new focus on graphite.
Additionally, CML will retain its interest in Red Fox Pty Ltd, which is actively exploring, and continue exploration programs over its Auburn tenements and its new rare earth element and base metal applications in Queensland and the Northern Territory.