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Barton Gold could fast-track IPO amid bidding frenzy in South Australia

SNL Image
The Perseverance open pit at Barton Gold's Tarcoola gold project in South Australia.
Source: Barton Gold


A bidding war has broken out in South Australia around the gold mill belonging to Barton Gold Pty. Ltd., which could fast-track the company's ASX IPO given the increased interest and Vale SA exploring in the neighborhood amid expectations that gold's record high could be just the start.

Barton is preparing the Tarcoola high-grade open pit for restart and processing through its own 650,000-tonne-per-annum plant associated with the historic million-ounce Challenger mine 120 kilometers away.

SNL Image
Barton Gold Managing
Director Alexander Scanlon.
Source: Barton Gold

Though Challenger and Tarcoola were closed in 2018 after administrators were appointed to operator WPG Resources Ltd., Barton Managing Director Alexander Scanlon believes that Challenger can form a processing hub for the region followed by a hub centered on Tarcoola and the Tunkillia project 70 kilometers away.

Barton says Tunkillia is South Australia's largest undeveloped gold-only resource, at 558,000 ounces.

Bidding war in South Australia

Tyranna Resources Ltd. refers to Challenger as being "centrally located" within the tenement package for its own Jumbuck gold project, which has been the subject of a bidding war of late.

The company withdrew a resolution at its July 31 general meeting in Perth, Australia, to approve the disposal of Jumbuck, after receiving in the prior two days an enhanced offer for the asset from Marmota Ltd., an offer from Alliance Resources Ltd. and a proposed variation of terms from Syngas Ltd.

Tyranna, which originally granted Syngas an option to buy its controlling joint venture interest in Jumbuck for A$950,000 in cash in October 2019, agreed to an increased offer of A$2 million from Syngas on July 31, and then on Aug. 10, the companies agreed to A$2.25 million.

On July 30, Alliance had offered A$25,000 for an exclusive right to conduct due diligence on Jumbuck and a further A$2 million for the project.

Locked in litigation against Tanzania's government, which allegedly expropriated the Ntaka Hill nickel project, Indiana Resources Ltd. also acquired 14 exploration licenses 150 kilometers southeast of Challenger on Aug. 4.

Indiana Chair Bronwyn Barnes said that aside from impressive historic results, which beckoned follow-up exploration and "scale opportunity," the strong gold price and existing infrastructure added to the allure of the area.

SNL Image
Barton Gold's Challenger gold processing plant.
Source: Barton Gold

The same day, Latitude Consolidated Ltd. was granted an exploration license for the Skye gold project 50 kilometers from Challenger, before graphite-focused junior Renascor Resources Ltd. expanded its Carnding gold project 20 kilometers west of Tarcoola on Aug. 10.

Vale has also taken a significant position encompassing the western margins of the Harris Greenstone Belt about 30 kilometers southwest of Tarcoola.

Scanlon, who formed Barton in early 2019, told S&P Global Market Intelligence that the added interest bodes well for Barton's planned IPO in 2021, which could occur in 2020.

"The flurry of dealings around our ground in South Australia essentially started with us drawing/re-drawing attention to the quality and potential of the region; however, most of the ground being traded is at a very early stage of development compared to our far more advanced assets," Scanlon said.

While Helix Resources Ltd.'s 1996 discovery of Tunkillia "set the market's imagination going," the area has been harder to explore than Western Australia as its mineralization is under cover, Hedley Widdup, executive director of investment company Lion Selection Group, told Market Intelligence.

Long bull run

Scanlon said listing Barton "makes sense on the front end of a bull market rather than the back end," and investment group Parq Capital, Barton's majority owner that facilitated the assets' acquisition from WPG, believed that another credit crisis was looming when it decided to focus on gold in 2017.

"The cheaper debt becomes and the more money that's printed and more desperate governments are to prop up the emotional self-confidence of their voters by convincing them everything is going to be OK, the more these asset bubbles become greater and greater problems," said Scanlon, who is a director of Parq.

Barnes said a lot of money "needs a home," having come out of the banking sector in the past 12 months, and with gold "looking good ... people are prepared to put money back into exploration which for the last four years they haven't been prepared to do en masse for the industry."

Widdup said there has been an "aggressive" start to this bull run, and "it does look as if there is a lot more to go," and the ultimate leverage in such a market is "finding something new that wasn't there before, because you get the gold value uptick and the exploration uptick."