De Grey Mining has signed an exclusive option agreement with gold explorer Kalamazoo Resources to potentially acquire Kalamazoo’s Ashburton gold project (AGP).
The AGP is located on the southern edge of the Pilbara Craton in Western Australia. Kalamazoo acquired the project from Northern Star Resources in 2020.
“We are delighted to have reached an agreement with De Grey for the future sale of the Ashburton gold project,” Kalamazoo executive chair Luke Reinehr said.
“Since acquiring the AGP in 2020, we have added significant value to the project in a short period of time and should De Grey exercise the option and acquire the AGP, Kalamazoo will receive a total of $33 million in cash and/or De Grey shares.
“On completion, this will be an excellent result not just for our shareholders, but also for De Grey and it’s proposed Hemi gold project in the Pilbara, which we identified as the natural regional processing facility for the high-grade sulphide gold contained at the Ashburton gold project.”
The agreement provides De Grey with a 12-month option to purchase the Ashburton project and its contained 1.44 million ounces (Moz) of gold resources and all associated mining and exploration licences and applications. The agreement also comes with the right to extend for a further six months.
During the option period, De Grey expects to complete metallurgical drilling and test-work at the AGP’s Mount Olympus resource, remodel geological mineralisation, alteration, weathering and geotechnical domains for processing and mining purposes, and run open pit optimisations.
De Grey is also required to spend a minimum of $1 million on exploration and assessment activities at the AGP and must share all results with Kalamazoo.
“The proposed 10Mtpa (million tonnes per annum) gold plant at Hemi, including a 0.8Mtpa POx (pressure oxidation) circuit, will be a regionally strategic asset that provides the company with the potential to treat gold ore and concentrates from other regional gold projects,” De Grey Mining managing director Glenn Jardine said.
De Grey sees the AGP as an opportunity to consolidate regional opportunities surrounding the Hemi gold project.
“This leverage has the potential to increase Hemi’s annual gold production rate, economic returns and project life,” Jardine said.
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