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Intermin Resources has range of share price catalysts on the horizon

Management recently upgraded production guidance at the Teal Gold Project.
Picture of Teal Gold Project
Entering into joint venture agreements for non-core ventures has allowed the company to focus on its Western Australian gold projects

Intermin Resources Limited (ASX:IRC) has adopted a strategy of entering into joint ventures for most of its broad range of projects which predominantly span base and precious metals.

The company also has exposure to platinum group elements (PGEs), vanadium, molybdenum and cobalt.

Intermin managing director Jon Price said: “Intermin’s strategy of entering into joint ventures with well-credentialed partners for its non-core projects allows it to focus on its strategy of building a mid-tier gold business in the Western Australian Goldfields while giving shareholders exposure to active programs across a range of commodities.”

Production outperformance, exploration results and resource upgrades are among the range of possible share price catalysts that could emerge over the next six months.

Teal Gold Project surprises on the upside

Just recently, Intermin upgraded production guidance from the Teal gold mine in Western Australia’s Goldfields.

READ: Intermin Resources mines more gold than expected at Teal project

Additional gold was found within and below the open pit, prompting management to increase production guidance to a range between 21,000 ounces and 22,000 ounces.

Extensive exploration in 2018

Intermin has a busy year ahead in 2018 after drilling over 26,000 metres in 2017 across eight priority project areas on major gold-bearing shear zones.

A fully funded $4 million, 50,000-60,000 metre drilling program is envisaged.

Price said: “The past year has been one of significant growth for the company on the back of a highly successful exploration program, the generation of cash flow from the first stages of the Teal operation and a number of value accretive acquisitions and joint ventures.

“Intermin is now in a strong and quite unique position to be able to self-fund a larger resource growth drilling program in 2018 with the focus on our key projects at Teal gold camp, Anthill and Blister Dam with planning at an advanced stage for 50,000 to 60,000 metres of drilling to commence this quarter.”

“Our shareholders are very supportive of our strategy to grow our resource base above the 1 million ounce mark with an aggressive drill program and that is our key objective for 2018."

Cash flow from Janet Ivy gold royalties

Intermin also owns a 50 cents per tonne mining royalty that relates to ore mined and treated from a mining lease near Kalgoorlie-Boulder in Western Australia.

The company entered into a deed for the sale of M26/446 in 2001 and it is now owned by Norton Gold Fields Ltd (NGF) which was delisted from the ASX on July 1, 2015.

As part of the sale, Intermin was prepaid nearly $1.4 million of the royalty as part of the acquisition cost, equivalent to a mining and treatment tonnage of 2.8 million tonnes.

Ore treated from the tenement at the Paddington mill in the March quarter was 425,000 tonnes which is subject to royalty payments of $212,500.

Intermin anticipates further royalty payments on a quarterly basis for material scheduled by NGF to be treated.

Wholly-owned Richmond vanadium project

Intermin owns five mineral exploration permits covering 481 blocks near Richmond in Queensland.

The mineral resource for Richmond is nearly 2.6 million tonnes grading 0.32% V2O5 at a 0.29% cut-off grade.

READ: Intermin Resources surges higher on revealing world-class vanadium resource

Intermin negotiated an earn-in joint venture whereby AXF Resources can earn 25% of the project area by spending $1 million within a one-year period.

Under the agreement, AXF will solely contribute to further expenditure of $5 million on the projects to earn a further 50% over a three-year period, inclusive of the completion of a feasibility study on part or all of the project area.

Imminent share price catalysts

With AXF now having formally committed to stage II expenditure of $5 million over three years to March 2021, there is the prospect of important near-term newsflow.

Infill drilling of the high-grade Lilyvale prospect at Richmond is planned for the September quarter of 2018 with the aim of upgrading the resource to the measured and indicated categories.

Initial discussions will also commence with potential offtake partners and local, state and national stakeholders.

Metallurgical test work is underway at two leading Chinese research institutes to assess optimal pre-concentration steps and downstream processing options.

Initial results on pre-concentration of the ore are expected in the current June Quarter.

Drilling commences at Menzies-Goongarrie Gold Project

Intermin negotiated an earn-in joint venture with Eastern Goldfields Ltd (ASX:EGS) whereby the group can and 25% of the project areas by spending $2 million within a two-year period.

Eastern Goldfields has the option to earn a further 25% by spending $2 million over the following two-year period.

The agreement also allows Eastern Goldfields to solely contribute to further expenditure of $1.5 million on the projects inclusive of a bankable feasibility study to support a mill installation in the Mt Edna/Menzies region to earn a further 15%.

Exploration drilling has commenced and results are due in the September quarter.

Consequently, there are potentially multiple share price catalysts for Intermin over the next six months.

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