PERTH (miningweekly.com) – Junior developer WPG Resources has taken full ownership of the Tunkillia gold project, in South Australia, after reaching an agreement with joint venture partner Helix Resources.
WPG acquired a 70% shareholding in the Tunkillia project at the end of May this year, through a transaction with Mungana Goldmines.
The ASX-listed company reported on Wednesday that it had signed a sale and purchase agreement with Helix to acquire the remaining 30% share in the project. As part of the acquisition, Helix would receive A$500 000 in cash and 10-million WPG shares, which would be held in escrow for a period of six months.
Once construction starts at the Tunkillia project, Helix would receive a further A$500 000 in cash and 10-million ordinary WPG shares. This consideration would also be payable in the event of the sale of more than 50% of the project, or a change of control of WPG.
An additional 1% net smelter royalty would also be payable on both 30% of gold and silver produced from the currently defined resource and on 100% of the mineral production from other areas within the tenement area.
Helix told shareholders on Wednesday that the funds from the sale of its 30% interest would be used to add to the company’s working capital and would allow Helix to continue to advance its core projects in Chile and Australia.
WPG executive chairperson Bob Duffin said that taking full ownership of the Tunkillia project was logical from a development and operating point of view.
Previous feasibility and scoping studies undertaken at Tunkillia identified a total resource estimate of about 26.3-million tonnes, averaging 1.04 g/t gold, containing 878 000 oz of gold and 2.5-million ounces of silver.
“Our initial efforts at Tunkillia are being directed towards defining higher-grade, but lower tonnage pockets within the existing deposits that may provide an opportunity to generate a cash flow prior to the development of the larger development itself,” Duffin said.
As a result of WPG taking full ownership of the project, a mining lease proposal submitted to the Department of State Development in April this year, would be withdrawn, allowing WPG to re-apply for a mineral claim and resubmit the mining lease proposal under its own name.