Mount Gibson picks up Northern Star’s Tanami Gold | Australian Markets
Mount Gibson Iron is seeking to make the leap from mining iron ore off the Kimberley coast to digging for gold within the Northern Territory, after signing up to buy tenements from Northern Star Resources.
The small-scale iron ore miner will draw from its substantial reserves of $460 million and stump up $50m in money to buy Northern Star’s share of the undeveloped Central Tanami gold project.
Mount Gibson had hinted in a latest quarterly replace that it had been “in a good position for opportunistic investments and acquisitions” and was reviewing potential targets as its iron ore operations at Koolan Island attain the tip of their life.
Chief govt Peter Kerr mentioned the deal was a compelling alternative to leap into gold for an “attractive” price and was inspired by the sector’s sturdy fundamentals which have seen costs rocket 36 per cent since this time final yr.
“Involvement in the Central Tanami gold project provides Mount Gibson with an opportunity to leverage the success of its Koolan Island iron ore operation to establish the foundations of a gold production business,” he mentioned on Wednesday.
About 40 million tonnes of high-grade haematite ore has been shipped since Mount Gibson restarted mining at Koolan Island in 2007.
But with the operation anticipated to have run its course within the subsequent 12 to 18 months, the cashed-up miner has needed to begin in search of its subsequent commodity.
Both Mount Gibson and the opposite half of the Tanami three way partnership — a listed company additionally named Tanami Gold — share the identical majority proprietor in a Hong Kong-listed sources investment group, APAC Resources.
And the pair additionally share a board member in Brett Smith, who’s chair of Mount Gibson and a non-executive director of Tanami Gold. Mr Smith has abstained from board choices at Mount Gibson relating to the transaction.
The transaction will need Foreign Investment Review Board approval to proceed.
The three way partnership covers more than 2100skqm of mining and exploration tenements within the Central Tanami area of the Northern Territory and claims to carry 1.6 million ounces of contained gold, in response to an replace in 2023.
Mount Gibson can even take over gold exploration tenements from Northern Star spanning about 3600sqkm.
Provided the transaction is locked away, Mount Gibson and Tanami plan to be in a place to make a development determination within the subsequent 12 to 18 months.
The market took to the deal, with Mount Gibson shares lifting 5 per cent to 32¢ in early trade on Wednesday, whereas Tanami Gold shares rose 3.3 per cent to six.3¢ apiece.
Azure Capital and Gilbert & Tobin have been advisers to the customer.
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