trending Market Intelligence /marketintelligence/en/news-insights/trending/Tm5DyfemFZrK-4EvUJwb3Q2 content esgSubNav
In This List

Leonora consolidation tipped as Genesis farms into Desdemona gold project

Blog

Major Copper Discoveries

Blog

Japan M&A By the Numbers: Q4 2023

Blog

Infographic: The Big Picture 2024 – Energy Transition Outlook

Case Study

An Oil and Gas Company's Roadmap for Strategic Insights in a Quickly Evolving Regulatory Landscape


Leonora consolidation tipped as Genesis farms into Desdemona gold project

Genesis Minerals Ltd. entered an exploration farm-in and joint venture with Kin Mining NL over the latter's Desdemona South project south of Western Australia's Leonora gold mining center, around which corporate advisor and broker Argonaut sees up to 5 million ounces of "stranded" deposits up for consolidation.

Under the deal announced on Dec. 10, Genesis will have the right to earn an initial 60% in the project and move to 80%, providing over 10 kilometers of strike of mafic stratigraphy similar to its 100%-owned 760,400-ounce Ulysses gold project immediately to the south.

Desdemona South, located between Ulysses and St Barbara Ltd.'s 8 million-ounce-plus Gwalia gold project, comprises nine tenements covering about 156 square kilometers, with a fragmented and discontinuous exploration history.

Work by a number of owners who have explored it for gold and base metals since the 1970s have been hindered by widespread transported cover and deep clay overburden, so a number of target areas have been developed for drill testing in 2020.

Aircore drilling at one such target, called Pelican-Flamingo, recorded 8 meters at 22.48 g/t gold from 60 meters, and a follow-up reverse circulation drilling defined narrow high-grade bedrock mineralization with a "best/typical" result of 1 meter at 9.3 g/t gold from 111 meters.

Genesis must spend at least A$250,000 on the joint venture area within 18 months, and may then earn 60% by spending a further A$750,000 within 36 months of commencement.

Once Genesis earns 60%, Kin may elect to form a 40/60 joint venture with Genesis, or grant Genesis the right to elect to sole contribute or form a joint venture.

When Genesis earns 70% — if Kin does not elect to form a joint venture at 60% — Kin may form a 30/70 joint venture with Genesis or grant Genesis the right to sole contribute or form a joint venture to move to 80%. Genesis would need to spend A$2.6 million in total to earn 80%.

Argonaut's Metals and Mining Research analyst James Wilson believes the move is part of a growing, inevitable process of consolidation in the area, calculating that about 5 million ounces sit in undeveloped satellites that exist within a 100-kilometer radius of Red 5 Ltd.'s King of the Hills project.

These include NTM Gold Ltd.'s Redcliffe, Kin's Cardinia, Ulysses, and Saturn Metals Ltd.'s Apollo Hill — none of which have mills yet all are contiguous with each other. If King of the Hills is included, which is being developed, the total would be closer to 7 Moz, Wilson said in an interview.

Genesis notes on its website that Ulysses is "close to world leading mining infrastructure which will potentially allow toll treatment of ore" from the project.

"It has to happen," Wilson said of consolidation around Leonora, particularly as the gold majors in the area need to backfill their mine life longer-term.

"Once the first play gets away then there will be a vortex [of deal momentum running] through everybody else," Wilson said. "If you're sitting there as Saracen Mineral Holdings Ltd. or even Gwalia, which is only at about 70% of its mill capacity, why wouldn't you fill it up with a toll treatment mill from someone else?"

Wilson said in an Oct. 22 note that Saracen's acquisition of Bligh Resources Ltd. and Silver Lake Resources Ltd.'s takeover of Egan Street Resources Ltd. all involve satellite deposits proximal to existing infrastructure which held "strategic value for future developments."

Argonaut sees Saracen's Thunderbox operation and Gwalia as potential toll treatment centers for Genesis’ ores, particularly as Gwalia's mill only treats ​less than 800,000 tonnes per annum versus its 1.2 Mtpa nominal design rate.

Wilson also noted that recent reporting suggests extraction rates may not reach the forecast 1.1 Mtpa rates until 2021 at the earliest, thus "enhancing the opportunity" for Genesis.

In the interview, Wilson also cited Dacian Gold Ltd.'s Mt Morgans project as the other potential option for toll processing.