Aurumin has continued to level its exploration and financial focus further on its Sandstone gold project in Western Australia’s Mid West region after selling the iron ore rights at its Mt Dimer operation to a subsidiary of mining goliath Mineral Resources.
The company will retain financial exposure through progress and royalty payments as part of a $250,000 sale to Polaris Metals for iron ore rights at four of its Mt Dimer exploration tenements. But more importantly, the sale takes management another step closer to wiping out an overhanging $6.4 million debt relating to its Sandstone acquisition last year.
Just nine days ago, Aurumin revealed it had pocketed $3 million from Beacon Minerals for the sale of its mining tenements at Mt Dimer. It left the company just $1.4 million to pay off a convertible note – and it can now clip another chunk off that figure.
Aurumin managing director Brad Valiukas said: “We are pleased to have executed the agreement with MinRes for the Iron Ore rights at Mt Dimer. This agreement allows Aurumin to unlock further value from Mt Dimer, complementing the sale of the Mining Tenements to Beacon Minerals, and will allow further reduction of the Convertible Note. We maintain upside from both progress payments and future production and look forward to working with MinRes on the exploration program.”
The Beacon deal saw that company take over all 13 of Aurumin’s Mt Dimer mining tenements. But the latter will remain financially exposed to any upside from the operation through a 2 per cent net smelter return royalty on future gold production above 12,000 ounces and on all other minerals.
Similarly, the sale of the iron ore rights to Polaris involves one exploration licence and three exploration licence applications for an initial cash payment of $250,000, a $250,000 progress payment on approval of a first program of works and additional progress payments up to a total of $1 million on a decision to mine, approvals to mine and on the start of mining. Aurumin will also receive a $1-per-tonne exported royalty on iron ore.
The deal is sweetened further by MinRes committing to reimburse Aurumin’s expenditure for approved exploration on the four tenements.
Aurumin says its recent divestments to Beacon and Polaris will allow it to focus more on its three granted Sandstone mining licenses covering 185 square kilometres of prospective ground, 12km south of the Sandstone township and about 520km north-east of Perth.
The company acquired the Central Sandstone gold project early last year and it has become Aurumin's signature project, with an expanding tenement footprint and its three granted tenements currently containing a total estimated resource of 18 million tonnes at a grade of 1.5 grams per tonne gold for 881,300 ounces in both open-pit and underground operations.
In addition to the gold resources, the project also came with a non-operating (but potentially refurbishable) 500,000-tonne per annum carbon-in-leach gold processing plant, related plant site infrastructure, operating licenses and camp facilities in the Sandstone township.
Aurumin says it wants to augment the Sandstone 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. The company is currently 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’s latest deal with Polaris doubles down on its strategic vein of divesting distractions while retaining potential upsides, acquiring lump-sum and progressive cash, reducing existing tenement holding costs, eliminating debt and hardening its exploration and development focus on its Sandstone project.
Management believes, in addition to extending its known mineral resources, that significant potential exists for the discovery of new deposits at Sandstone and is focussed on its comprehensive exploration program to assess the project’s potential.
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By Doug Bright
