Mutiny Gold (ASX: MYG) is a diversified resource company focused on the exploration and development of the company's gold, copper and nickel tenements in Western Australia.
Mutiny’s main focus is the Deflector gold copper deposit which is located within the Gullewa project.
Perth-based Mutiny Gold (ASX: MYG) has closed a transformative deal to acquire the advanced Gullewa Gold Project from Canadian Miner ATW Gold Corp (TSX V: ATW) providing Mutiny with a potential company-maker transaction - with near term gold production capability.
Mutiny will farm into ATW Gold Corp’s Gullewa Gold Project by paying $9m to earn 70% of the project.
To fund the deal, Mutiny said it is at an advanced stage with an institutional investors and a rights issue to shareholders.
The Gullewa Gold Project is a mining centre located 450km north of Perth WA and 160km east of the port city of Geraldton.
The project contains substantial existing JORC estimated resources totaling 650,000oz gold (Au) and 25,000 tonnes of copper (Cu) including Measured and Indicated Resources of 230,000oz Au and 17,000 tonnes Cu.
Infrastructure includes 300kt pa mill, camp, offices and other facilities, with significant potential through near mine exploration to increase the resources.
The project has already received significant pre-approvals, agreements and permits in place to commence mining. Mutiny will focus on a bankable feasibility study and mining ramp up planned for 2010/11.
Preliminary Mine Studies indicate the operation would be profitable.
John Greeve, Mutiny managing director, said the acquisition of Gullewa is a key milestone toward realising the company’s objective of becoming a profitable gold producer in the Murchison region.
“This is a very advanced project in the highly prospective Gullewa Greenstone Belt with substantial upside exploration and development potential. The Deflector is essentially a “new mine” that previously underperformed due to the lack of a copper flotation circuit.
The acquisition is also synergistic with Mutiny's White Well Gold project, with the scoping study for that project calling for the gold ore to be concentrated on site and then transported for processing.
It is envisaged that Gullewa will be the processing centre for White Well as well as processing the significant mineral endowment to be unlocked at Deflector.
Significantly, Mutiny believes by re-commencing open pit operations at Deflector, the estimated payback period is only eight months. After two years, the operation would go underground.
Upon earning a 70% interest in the Gullewa Project, Mutiny can elect to enter into a 70/30 joint venture agreement with ATW or purchase the remaining 30% interest by completing a positive feasibility study of the Gullewa Project and by paying to ATW an additional AUD$4.0million.
Mutiny can elect to acquire the Gullewa Project 100% and ATW will retain only a 10% net profit interest.
As consideration for the acquisition, Mutiny will purchase the project for a total cash payment of $9m plus replacement of the bonds for 70% ownership and the right to acquire 100% for a further $4m.
- By making the following cash payments:
- Payment of $250,000 non-refundable deposit upon signing the agreement;
- Payment of AUD$1.25million on or before September 24 2010;
- Payment of AUD$1.5million on or before January 24 2011;
- Payment of AUD$4.0million on or before July 24 2011; and
- Payment of AUD$2.0million on or before 30 October 2011.
Mutiny has also agreed to pay all exploration and development expenditures on the Gullewa Project until 30 October 2011.
About the Project
The Project contains one relatively undeveloped mine (Deflector), 5 partially mined open pits, at least 5 areas of historical underground workings and numerous untested soil geochemistry, gravity and aeromagnetic anomalies.
Gold or gold-copper mineralization (plus some secondary silver) was exploited at each of the open pits and underground workings. Operations that mainly comprised open cut mining with CIL processing to extract gold were suspended in January 2003.
Existing infrastructure includes a 300kt pa mill, extensive water bore fields and tailings facilities with ready capacity. The camp contains wet and dry mess and accommodation for 40 workers. The office and workshop facilities are extensive. In addition, a fully operational power station is on site and haulage roads are in good condition.
Mutiny plans to focus its effort in the initial phase on the Deflector Deposit with the objective of completing a bankable feasibility study and commencing mining operations at the existing Deflector Pit, from which only 2,000oz of a pre-mining total of in excess of 530,000oz Au have been mined.
The feasibility process will include infill drilling to upgrade portions of the Indicated Resource to Measured Resource status.
Profitable Mine Studies
As part of Mutiny’s extensive due diligence and pre-acquisition review, Mutiny has completed several mine studies in conjunction with technical specialists seconded from AMC Consultants Pty Ltd.
The studies, based on the previous Bankable Feasibility Study (BFS), completed in 2006 by the then owner Batavia Mining Limited (Batavia, ASX: BTV) concluded that the establishment of mining operations at Deflector would be profitable and the Project was financially robust. Mutiny intends to convert these studies into a new BFS.
Gullewa Processing Plant
Studies show that the existing processing plant at Gullewa can be modified to treat copper gold ores by the addition of a gravity concentration and flotation circuit to recover the free gold and copper minerals. It is anticipated that a modified processing plant would service all the foreseeable future needs for a Gullewa based operation.
Metallurgy – Deflector Deposit
The ore from the Deflector deposit at Gullewa is a copper/gold (with secondary silver) ore and as such requires a different ore treatment regime to the cyanide leach process used to treat conventional free milling gold ores.
Conventional CIL technology cannot be used to treat all the Deflector ore due to the very high consumption of cyanide and the formation of soluble copper cyanide complexes.
These problems caused the closer of the previous mine operations in 2003. It is planned to install a plant capable of treating the ores from the Deflector (and similar deposits). At this stage the plant would be designed to treat 300,000-400,000 tonnes per annum.
The plant initially would incorporate crushing, grinding, gravity concentration, flotation and concentrate handling (thickening and filtration). Where possible the existing Gullewa equipment will be repaired (and upgraded) and utilized in the new circuit.
It would also be intended that the cyanide leach tanks and gold recovery circuits be repaired and available to treat any free milling gold ores such as from White Well or one of the ores from the Gullewa lease.
Only minimal exploration has been carried out on the deposit since August 2006. Significant drilling has, however, been carried out along strike, and Mutiny intends, in due course, to investigate the results and, if appropriate, incorporate them into a reestimation of the Deflector Mineral Resources.
Mutiny believes there is significant potential for the discovery of additional mineralisation and the delineation of additional resources. Recent first-pass drilling by ATW in the vicinity of the Deflector Deposit encountered significant mineralisation that requires follow-up drilling.
At current market valuation of around $5 million for Mutiny, the advanced Gullewa asset and deal will place Mutiny on the radar of alot more investors looking to find a gold play at pre-advanced project development prices.