Aurumin is sharpening its focus on its Sandstone gold project in Western Australia after selling its Mt Dimer ground in a strategic decision that has edged it closer to wiping out an overhanging $6.4 million debt.
The company will pocket $3 million from Beacon Minerals for the sale of Mt Dimer, leaving it just $1.4 million to pay to remove a convertible note relating to its Sandstone acquisition last year. Beacon will take over all 13 of the Mt Dimer tenements, but Aurumin will remain financially exposed to the operation through a 2 per cent net smelter return royalty on future gold production above 12,000 ounces and on all other minerals.
The Mt Dimer package comprises five mining leases, one prospecting licence and a suite of seven granted and pending miscellaneous licences. But Aurumin says its strategic divestment will allow it to put more effort and attention into its promising Sandstone play.
Aurumin managing director Brad Valiukas said: “This is a good outcome for both parties, allowing Aurumin to unlock value from the Mt Dimer tenements on completion and still retain upside exposure with the royalty. Importantly, this divestment will allow Aurumin to pay back a majority of the convertible note, currently with $4.4M outstanding, taken on with the acquisition of the Sandstone assets in early 2022. We will continue to progress options to clear the remainder of the convertible note. With the planned divestment of the Mt Dimer tenements, and our recent sale of Karramindie, the company will have a clearer focus on our Sandstone operations as a production target.”
Due diligence and execution of sale and royalty agreements have already been completed as part of the deal, with other details to be finalised by December 15.
At the time of settlement of Aurumin’s Sandstone purchase in March last year, the project contained a JORC-compliant mineral resource of 22 million tonnes at a grade of 1.1 grams per tonne gold for 748,000 ounces in open-pit and underground estimates. The Sandstone ground and resource came with a non-operating, 500,000-tonne per annum carbon-in-leach gold processing plant, related infrastructure, operating licenses and camp facilities in the Sandstone township in WA’s Mid West region.
Aurumin said then that it wanted to augment the resource with the 65,000 ounces of gold from its Johnson Range project to help kickstart its new operation and to advance the Shillington-Two Mile complex at Sandstone and better define its underground potential.
Management says it is now looking forward to Beacon putting Mt Dimer into production and processing the ore at Jaurdi, as it sees plenty of upside potential in the project. It is also maintaining exploration ground around the Mt Dimer mining tenements and in the wider area.
Aurumin says its recent divestments will allow it to focus more on its three granted Sandstone mining licenses that cover 185 square kilometres of prospective ground, 12km south of the Sandstone township and about 520km north-east of Perth.
Sandstone now has a resource of 18 million tonnes at a grade of 1.5g/t gold for 881,000 ounces of gold in both open pit and underground operations, all within its granted mining leases.
The company is engaged in ongoing open-pit resource definition, with the Shillington and Two Mile Hill resource zones recently updated and nine other smaller resources to be reviewed.
Aurumin believes there is significant potential for the discovery of new deposits, in addition to extending its known mineral resources. It says it is focussed on the comprehensive exploration program it has developed to assess its Sandstone potential.
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By Doug Bright
