PERTH (miningweekly.com) – ASX-listed Pantoro has inked a multimillion-dollar deal to acquire a 50% interest in the Central Norseman gold project (CNGP), in Western Australia.
Pantoro will form a joint venture (JV) with Central Norseman Gold Corporation and its subsidiary, and will take over management control of the CNGP, including mining tenements and infrastructure, with the focus of returning the 4.4-million-ounce project to production in the near term.
“Following an extensive review of acquisition opportunities during the past two years, CNGP was a clear standout for Pantoro, with large, high-grade mineral resources, an extensive infrastructure already in place at company, local shire and national government infrastructure levels,” said Pantoro MD Paul Cmrlec.
Under the terms of the agreement, Pantoro will pay an initial A$10-million in cash, with a A$2.5-million deposit payable to the vendor on the signing of a binding legal document.
A further A$20-million in Pantoro shares will also become payable on the completion of the transaction.
A deferred cash payment of A$15-million will be payable 12 months after the completion of the transaction, and a further A$10-million on the 24-month anniversary of the transaction.
Pantoro would also be liable for the first A$50-million of project expenditure, with the vendor to be paid a 1% net smelter royalty on Pantoro’s attributable gold and silver produced from CNGP, capped at A$6-million, plus a 0.0025% royalty for a period of five years after the first A$6-million is paid.
A A$10-million milestone payment will also become payable on the definition of a 1.8-million-ounce Joint Ore Reserves Committee-compliant ore reserve.
Pantoro told shareholders this week that the transaction cost equated to some A$39/oz of Pantoro’s attributable share in the project.
“The acquisition cost of less than A$40 per attributable mineral resource ounce is an enviable metric which provides Pantoro with the opportunity to add significant shareholder value in the immediate term,” said Cmrlec.
CNGP has produced over 5.5-million ounces of gold since operations began in 1935, and the project includes a 720 000 t/y processing plant, which was last operational in 2016.
The project also includes an operational power station that services the project and the town of Norseman, an operational site laboratory, extensive road infrastructure, an accommodation camp and office and workshop infrastructure.
“It is rare to find a project which provides a large, high-grade mineral resource, which is infrastructure rich, in our own backyard. With existing operations in Western Australia, Pantoro’s intimate knowledge of legislation and operational requirements is a clear advantage in recommencing gold production from the area,” said Cmrlec.
Pantoro would immediately focus on establishing a clear production development plan with the aim of initially establishing operations to support the production of 100 000 oz/y, expanding to 200 000 oz/y over the following two to four years.
The transaction will be funded using a combination of Pantoro’s existing cash reserves, ongoing cash flow from its Halls Creek operation, a A$20-million scrip issued to the vendor, and a A$43-million fully underwritten placement.
The placement will issue some 215-million fully paid ordinary shares at a price of 20c each, under Pantoro’s existing placement capacity. The offer price represented a 9.1% discount to Pantoro’s last closing price, and a 13% discount to the company’s 20-day volume weighted average share price.