Minerals 260 buys $150M Aus gold project from Zijin

Junior explorer Minerals 260 (ASX: MI6) says it will acquire the brownfield Bullabulling gold project in Western Australia from Chinese diversified major Zijin Mining (SH: 601899) for A$166.5 million ($147.9 million) in cash and shares.

Minerals 260, which had A$9.9 million in cash as of September and a market capitalization of A$30 million, plans to fund the purchase through an equity raising. The company suspended trading Jan. 2 as per ASX rules on the deal’s size for a junior. It may resume in late March or April, it said. 

Chair Tim Goyder, who also chairs Liontown Liontown Resources (ASX: LTR) from where Minerals 260 was spun out in 2021, called the acquisition a transformational opportunity in a record-high Australian gold price environment.

“We believe that this opportunity, or this project, will deliver for us,” he said during a conference call on Tuesday. “There’s no reason why we can’t build a substantial company.”

Shares in Minerals 260 were at A13¢ apiece when they were suspended. They were as high as A35¢ a year ago. 

1960s producer 

Bullabulling, located 65km southwest of Kalgoorlie, was discovered in the 1960s and produced 179,000 oz. of gold under Resolute Mining (ASX: RSG) before it was placed on care and maintenance in 1998. Zijin acquired it in 2014 for A$25 million through its subsidiary Norton Gold Fields. The project holds a resource of 60 million tonnes at 1.2 grams gold per tonne totaling 2.3 million ounces.

Minerals 260 plans to fast-track development, capitalizing on current gold prices exceeding A$4,000 per ounce. The company aims to launch 80,000 metres of drilling to complement the 530,000 metres completed and will focus on underexplored southern areas.

Studies are set to commence by this September, with a goal to define a maiden reserve in the north, where 89% of ounces are in the indicated category.

Managing director Luke McFadyen, formerly of OZ Minerals, said the acquisition would position Minerals 260 for rapid growth in the gold sector, leveraging Bullabulling’s potential amid favourable market conditions. The project doesn’t require A$4,200 per oz. gold to be profitable, as pit shells were calculated at A$3,000 per ounce, he said. 

Aggressive plan

“We’ve done the deepest due diligence of my career to ensure the resource stacks up,” McFadyen said on the call. “You won’t see us go slow on this. This is going to be accelerated all the way.”

The project benefits from proximity to infrastructure, including power, water and the Great Eastern Highway, along with established mining leases and a Native Title Land Use Agreement.

Minerals 260, which had most recently been drilling the Moora copper-gold project in WA, had told shareholders it was actively looking for other opportunities.

Goyder expressed confidence in replicating success at Liontown, which recently completed the A$1-billion Kathleen Valley project to become Australia’s newest lithium producer.

“My phone’s been ringing this morning from engineers, from drilling contractors, all sorts of people wanting to get involved this project,” Goyder said. “So we’re just going to be doing the doing now and deliver, deliver and deliver.”