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Pantoro does transformational deal for 4.4-million ounce gold project

Shares are now in a trading halt to complete a fully underwritten $43 million placement.

sign that says acquisition
The project has a 720,000 tonne per annum processing plant that last operated in 2016

Pantoro Ltd (ASX:PNR) has signed a binding agreement to acquire 50% of the Central Norseman Gold Project (CNGP) in the Eastern Goldfields of Western Australia.

A joint venture will be formed with the vendor which Pantoro will manage with a focus on returning the 4.4-million ounce project to production status.

Consideration will be a mixture of cash, shares and expenditure with near-term payments being $10 million cash on completing the deal and Pantoro sole funding the first $50 million of expenditure.

This is a compelling deal for Pantoro which is getting a near-term gold mine with existing infrastructure for A$39 per JORC Resource ounce when gold is trading at around A$1,800 per ounce.

After two years of searching, CNGP the “clear standout”

Pantoro’s managing director Paul Cmrlec said: “Following an extensive review of acquisition opportunities during the past two years, CNGP was a clear standout for Pantoro with large, high grade Mineral Resources, and extensive infrastructure already in place at company, local shire and national government infrastructure levels.

“The acquisition cost of less than $40 per attributable mineral resource ounce is an enviable metric which provides Pantoro with the opportunity to add significant shareholder value in the immediate term.

“It is rare to find a project which provides a large, high grade mineral resource which is infrastructure rich in our own back yard.”

Large tenure could host multiple million-ounce deposits

CNGP comprises 146 near-contiguous mining tenements covering over 1,000 square kilometres.

The project is considered to be highly prospective with discovery potential for multiple 1+ million ounce deposits.

Pantoro considers a number of the existing 35 JORC resources to be near-development ready and aims to establish operations supporting production of 100,000 ounces per annum.

The goal will be to expand this to 200,000 ounces per annum over the following 2-4 years.

READ: Pantoro’s high-grade drilling demonstrates continued upside at Nicolsons Gold Mine in WA

Cmrlec said: “With existing operations in Western Australia, Pantoro’s intimate knowledge of legislation and operational requirements is a clear advantage in recommencing gold production from the area.

“There are many synergies with Pantoro’s acquisition and development of the Halls Creek Project approximately five years ago.

“Both projects have outstanding mineral resources which are amongst the highest grade in Australia, and mineralisation styles are very similar allowing Pantoro to leverage its project skills that has been highly successful in applying at Halls Creek.”

Capital intensive infrastructure already in place

He added: “Like Halls Creek, CNGP is infrastructure rich with a major national highway adjacent to the project, active railway infrastructure servicing the Esperance port 200 kilometres to the south, a sealed air strip, a regional hospital and schooling to year 12.

“At the CNGP level, there is a processing plant which last operated in 2016, road infrastructure with formed roads to all mineral resource areas, an accommodation camp and housing, a fully operational power station, water supply infrastructure and several office and work shop complexes.

“Access to the existing infrastructure provides value to the CNGP, and will ultimately reduce the development cost considerably, just as it did in the development of Halls Creek.

“Our team will immediately focus work on defining, developing and operating a large scale gold production hub within the next 12 to 18 months.”

$43 million placement underway to fund transaction

The transaction and development of CNGP is to be funded using a combination of existing cash reserves, ongoing cash flow from gold operations, a $20 million share issue, and a $43 million fully underwritten placement.

The placement will see around 215 million shares issued at 20 cents.

Quick facts: Pantoro Ltd

Price: 0.265 AUD

Market: ASX
Market Cap: $311.63 m

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Pantoro Ltd (ASX:PNR) managing director Paul Cmrlec speaks to Proactive Investors about the gold producer's operations at the multi-faceted Halls Creek Project, in the Kimberley Region of Western Australia. At the original Nicolsons underground mine, new equipment is being deployed to...

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