Early cash flow with further growth potential
The White Dam Gold Operation is located in South Australia, approximately 100km south-west of Broken Hill.
The White Dam Gold Operation is a heap leach project and since, 2010 has produced approximately 175,000 oz gold from heap leaching of ~7.5 Mt of ore which has been mined from two open pits. Available reconciliation of mining against resource estimates is good and indicates that a significant tonnage of mineralised material remains to be mined from both the Hannaford and Vertigo open pits.
In December 2019, GBM completed the acquisition of Millstream Resources Pty Ltd (Millstream). The Company signed a Heads of Agreement with Stibium Mining Pty Ltd to acquire its subsidiary Millstream for consideration of 15 million fully paid shares (Shares) (on a post consolidation basis) in the capital of GBM Resources Ltd.
Millstream can initially earn a 50% interest in the White Dam Gold Project as part of an unincorporated joint venture (Joint Venture) and has an option to the remaining 50% of the White Dam Gold Project.
- GBM farm-in and Option to Purchase (OTP) agreement to acquire up to 100% of the White Dam gold-copper heap leach operation
- GBM plans to leverage its in-house metallurgical expertise to build a SART plant with the objective of improving the operations profitability and generating early cashflow
- Utilise these funds to evaluate additional opportunities to extend mine life and potentially drill test near-mine high-priority IOCG targets
White Dam assets included in farm-in OTP agreement:
- Mine heap leach and adsorption facility
- In-pit remnant mineralisation
- Small team of skilled plant operators
- 489 km² of mining and exploration licences with priority drill targets defined
Significant infrastructure footprint
The White Dam Gold operation includes the open pit mines, dump / heap leach, the gold extraction plant and related infrastructure.
Over the last 12 months gold production has averaged ~450 oz / quarter. While drought has reduced water availability, the operation has sufficient supply to operate in its current lower irrigation configuration.
Key farm in and option to purchase agreement (OTP) terms:
- Two stage, 18-month farm-in and Option To Purchase (OTP) agreement for 100% of the White Dam Au-(Cu) heap leach operation and leases for A$1.16M plus assumption of environmental bond.
- Currently owned by Round Oak Minerals Pty Ltd, a wholly owned subsidiary of the A$5.3B Washington H. Soul Pattinson Ltd (ASX:SOL).
- GBM to fund and construct a SART plant at a minimum cost of A$660,000 to earn-in to a 50:50 unincorporated joint venture (JV).
- JV to commence on commissioning of the SART circuit, currently targeted for 2Q 2020.
- On initiation of the JV, all revenue and costs to be shared 50:50 between GBM and Round Oak Minerals.
- GBM holds an option within 12 months from commissioning of the SART plant to acquire the residual 50%, including mining and exploration leases, for A$500,000.
- If the OTP is exercised:
- GBM to assume the environmental liabilities for eventual White Dam closure, currently standing at A$1.9M.
- Round Oak to retain a 2% NSR royalty on all copper and gold production.
- If the OTP is not exercised, and GBM elects to withdraw from the JV, Round Oak has the option to retain the SART plant, or require GBM to remove the plant and rehabilitate the SART plant area.