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PERTH (miningweekly.com) – ASX-listed Mungana Gold would switch its focus to zinc following a A$15-million deal with shareholder Kagara.
The company said on Tuesday that shareholders were expected to vote on July 24 on the A$15-million acquisition of the Chillagoe base metals and gold assets, in Queensland, from Kagara, the cornerstone asset of which was the high-grade King Vol zinc deposit.
The A$15-million consideration would comprise the issue of two secured convertible notes, valued at A$7.5-million each. The first instrument would be automatically convertible at 10c a share, while the second would be convertible at 20c a share, up to five years from the date of issue.
The proposed acquisition had the potential to increase Kagara’s shareholding in Mungana from 59.25% to 79.07%.
Mungana chairperson Joe Treacy said that the acquisition would mark the beginning of a new chapter for Mungana, based on a rejuvenated growth strategy.
“There are very few undeveloped zinc assets anywhere in the world, which makes King Vol, with its exceptional grade and proximity to a partially completed base metals concentrator, as well as its location in a zinc-rich province with outstanding exploration upside, a unique and exciting opportunity.”
The King Vol project has a Joint Ore Reserves Committee-compliant indicated resource of 900 000 t, at 16% zinc, 0.9% copper, 0.9% nickel and 42 g/t silver, and an inferred resource of 1.9-million tonnes, at 9.9% zinc, 0.6% copper, 0.4% lead and 24 g/t silver.
The deposit remains open along strike in both directions and at depth, offering significant potential to expand the higher-grade core, Treacy said.
He added that the King Vol deposit had the potential to underpin a significant new zinc development, with strong economics, allowing Mungana to take advantage of a looming shortfall in the zinc market.
Following the acquisition, Mungana would start technical studies to upgrade the existing mineral resource and would undertake exploration to expand the resource. This work would lay the foundation for a feasibility study, designed to advance King Vol towards development in the medium term.
“Following the sale of the South Australian gold assets, Mungana will have sufficient cash to pursue a focused, low-cost exploration programme at Chillagoe, designed to upgrade and expand the existing resources and assess some promising regional growth,” Treacy said.
“Our broader strategy is to advance these assets towards development and position Mungana to take advantage of a significant looming market opportunity for zinc, which we believe will continue to emerge over the next two to three years.”