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Highlights
- Adelong Gold and Great Divide Mining have entered into a farm-in agreement, with GDM acquiring a 51% stake in the Adelong Gold Project.
- GDM will refurbish the Adelong Gold Plant, targeting the first gold pour within 12 months.
- The Ryan family, founders of GDM, bring significant mining experience and equipment to ensure the project meets its production milestones.
Adelong Gold Limited (ASX:ADG) has announced a strategic partnership with Great Divide Mining Limited (ASX:GDM) through a binding farm-in agreement that will see the latter acquire a 51% interest in the Adelong Gold Project, located in southern New South Wales. The collaboration is expected to revitalize the project and resume gold production within 12 months, with the first gold pour targeted by leveraging GDM’s extensive operational expertise and infrastructure.
Historic Gold Production and Future Potential
The Adelong Gold Project, located in the southern highlands of New South Wales, has a rich history of gold extraction, with over 800,000 ounces of gold produced from the region to date. The project covers approximately 70 km² of mining and exploration leases, including mining lease ML 1435 and exploration lease EL 5728. Adelong Gold holds a JORC 2012 Resource of 188,000 ounces of gold, with significant potential for further exploration and resource expansion.
Adelong Gold has been actively working to bring the project back into production, and the agreement with Great Divide Mining is a crucial step toward achieving this goal. One of the project's key assets is its modern processing plant, constructed in 2016/17, which will undergo refurbishment under GDM's management. The site also holds strong prospects for resource expansion, with historic mining focusing on high-grade zones that have left untapped potential for further exploration along strike and at depth.
Key Terms of the Farm-In Agreement
The partnership between Adelong Gold and Great Divide Mining comes with several strategic terms that position both companies to benefit from the project’s success:
- Due Diligence: GDM will conduct a 60-day due diligence period, allowing them to review all project data and assets thoroughly. Upon satisfactory completion, GDM will acquire a 15% stake in Challenger Gold Mines Pty Ltd (CGM), the entity that owns the Adelong Gold Project, for $300,000. This initial investment marks the first phase (Tranche 1) of the farm-in agreement.
- First Gold Pour: Upon achieving the first gold production from the refurbished Adelong Gold Plant, GDM will acquire an additional 36% interest in CGM, bringing its total stake to 51%. This milestone must be met within 12 months of the agreement, or else Adelong Gold retains the right to reclaim 100% ownership of the project (Tranche 2).
- Project Management: GDM will assume the role of Adelong Venture Manager, overseeing the day-to-day operations and project development. Adelong Gold is not required to make any financial contributions to the project until gold production begins, allowing the company to focus on resource development without significant upfront capital commitments.
Experienced Leadership and Operational Milestones
The Ryan family, founders of Great Divide Mining, bring extensive mining experience, having operated gold mines such as Shamrock and Manumbar Mines in southeast Queensland. Their expertise, coupled with their ownership of mining equipment, will play a pivotal role in ensuring that the Adelong Gold Plant refurbishment and gold production proceed on schedule.
Paul Ryan, a non-executive director at GDM, will lead the project’s mining and plant management efforts. The Ryan family’s equipment, previously contracted for various mining and civil earthmoving projects, will be instrumental in refurbishing and restarting the Adelong Gold Plant.
Project Objectives and Future Plans
In addition to refurbishing the Adelong Gold Plant, the partnership aims to conduct further exploration and feasibility studies to expand the project's gold resources. The initial works program will include testing the processing plant, drilling, and securing necessary environmental and regulatory approvals. Testing and commissioning activities at the Adelong Processing Plant are expected to commence during Q3 FY24, setting the stage for the first gold production.
