Australian Security Exchange (ASX)-listed mining company TG Metals has executed a sale and purchase agreement to acquire an 80% interest in the Van Uden Gold Project in Western Australia (WA) from Montague Resources Australia.
The remaining 20% equity interest in the project is retained by Barto Gold.
The Van Uden Gold Project, situated on the Forrestania Greenstone Belt, is strategically positioned near existing gold processing plants and TG Metals’ Burmeister lithium deposit at the Lake Johnston Project.
TG Metals will make an upfront cash payment of A$2.5m ($1.5m) and issue 5.71 million fully paid ordinary shares valued at A$1m as part of the transaction.
The shares issued will be subject to a 12-month escrow period.
An additional A$500,000 deferred cash payment is contingent upon the company raising future equity of at least A$1m, or within 12 months post-acquisition, whichever is earlier.
TG Metals CEO David Selfe said: “This strategic acquisition provides TG Metals with an advanced gold project with opportunities for near-term cash flow, at a time of record prices for gold. It is located very near to our existing Lake Johnston lithium deposits, which allows opportunities for operational synergies for both of TG’s projects.”
The Van Uden Gold project encompasses four mining leases and three exploration licences, with two areas of gold mineralisation identified as Van Uden Group and Gold City.
Previous explorations have revealed significant mineralisation, with potential for expansion given the limited drilling depth explored to date.
TG Metals has highlighted walk-up drilling targets and a rapid pathway to JORC 2012-compliant resources for the project.
“The Van Uden Gold Project has historically only been subject to shallow drilling, providing enormous exploration upside through testing the known mineralisation down dip along its entire plus 2,000m strike length. There are several near-term high-priority opportunities, including defining a JORC 2012 mineral resource estimate from the extensive historical database, and assessing the viability of existing ore stockpiles for toll treatment,” Selfe added.
The acquisition is expected to provide substantial benefits to TG Metals’ shareholders, including increased tenement holdings, diversification of the commodity base with the addition of gold and potential near-term revenue from toll treatment opportunities.
Funding for the upfront cash consideration will come from TG Metals’ existing cash reserves. The deferred payment will also be secured from these reserves and is subject to the completion of the acquisition’s conditions precedent.
