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Highlights
- Capricorn will be acquiring Mumbakine Well Project for AU$1.25 million.
- Capricorn’s existing Karlawinda Gold Project is situated near the Mumbakine Well Project.
- Capricorn expects to complete transaction by end of June 2022.
Australian Gold explorer, Capricorn Metals Ltd (ASX:CMM) has entered into a binding agreement with Gascoyne Resources Limited (ASX:GCY) to buy its Mumbakine Well Project. The project is situated near Capricorn’s Karlawinda Gold Project (KGP).
Gascoyne is an ASX-listed materials company involved in the exploration, production, and development of multiple gold projects located in Western Australia. The Mumbakine Well Project is situated in Pilbara, Western Australia.
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The shares of Capricorn were spotted trading 3.531% high on AU$3.665 a share at 11:45 AM AEST on the ASX.
Details of the agreement between Capricorn and Gascoyne
Upon transferring the exploration licence, Capricorn will pay AU$1.25 million to Gascoyne. In addition to this, 0.5% of net smelter royalty will be paid on the gold produced from Mumbakine Well Project.
The agreement also talks about contingent deferred payments. AU$1.5 million to be paid either in cash or shares when the company announces JORC compliant Minerals Resource Estimate over 200,000 ounces of gold produced. AU$2.0 million will be paid when the company makes an ASX-announcement that its board has decided to begin the commercial mining activities.
The catch in the contingent deferred payments is that if Capricorn announces the board’s decision to begin with commercial mining activities before the JORC compliant Mineral Resources Estimate, then the company will pay AU$3.5 million (AU$1.5 million-plus AU$2.0 million).
Capricorn said that all payments could be made in cash or shares. The choice of mode of payment is in Capricorn’s decision.
The completion of the transaction is subject to some third-party consent. West Australian regulatory approvals are also pending. The company expects to complete the transaction by the end of June 2022.
Image source: © Fireflyphoto | Megapixl.com
Why did Capricorn show interest in the Mumbakine Well project?
The project is around 10 kilometres away from the Bibra open pit and the processing facility of Capricorn. The area covered by the project is circa 361 square kilometres. In addition to this, it will offer access to the Great Northern Highway as it is located adjacent to KGP.
According to the ASX-announcement, very limited exploration work has been undertaken on the project. Compass Resources NL and Battle Mountain Australia conducted some drilling in the 1990s. The historical drilling provided some encouraging results at the Jims Vein and the Central prospects.
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Management commentary
Mark Clark, executive chairman at Capricorn, commented on the development:
Simon Lawson, the CEO and managing director of Gascoyne, said:
