viewAlto Metals Ltd

Alto Metals has strong growth potential of Sandstone Gold Project highlighted by outside interest


The company’s successful exploration program and recent takeover bids suggest the project has further growth potential.

Alto Metals Ltd - Alto Metals Sandstone Project potential backed by three unsolicited takeover bids

Quick facts: Alto Metals Ltd

Price: 0.11 AUD

Market: ASX
Market Cap: $41.07 m

Alto Metals Ltd (ASX:AME) believes its Sandstone Gold Project has great growth potential, highlighted by the company fielding three separate unsolicited takeover offers in the last 15 months.

The company considers the offers from Middle Island Resources Ltd (ASX:MDI), Goldsea Australia Mining Pty Ltd and Habrok Mining Pty Limited are a clear endorsement of the long-term value potential of the project and extensive 800 square kilometre tenure.

The current unsolicited, unconditional cash takeover offer from Habrok Mining Pty Limited is for 6.6 cents per share and Alto’s board has recommended shareholders reject the offer.

Drilling to date

The Sandstone Project between the Youanmi and Edale Shear Zones is surrounded by multi-million-ounce gold deposits and producing gold mines in the East Murchison of Western Australia.

Historically the project has produced over 1.3 million ounces of gold since the 1890s and has a mineral resource estimate of 6.2 million tonnes at 1.7 g/t for 331,000 ounces, however, the focus was on near-surface oxide material with very little drilling below 100 metres.

Alto has started an initial 2,000 metres infill and step-out program at Lord Nelson, which is part of an extensive 10,000 metres exploration program planned for the project.

On May 27, 2020, the company increased the total indicated and inferred mineral resource to 6.2 million tonnes at 1.7 g/t for 331,000 ounces and updated the JORC 2012 inferred mineral resource to 1.8 million tonnes at 1.9 g/t gold for 109,000 ounces.

The company has received three unsolicited takeover bids.

Potential beneath pit

There is high-grade gold potential both along strike and beneath the historic Lord Nelson pit with recent drill results from shallow mineralisation 200 metres to the south of the pit including:

  • 10 metres at 4.1 g/t from 34 metres, including 2 metres at 12 g/t from 36 metres;
  • 12 metres at 3.4 g/t from 66 metres, including 2 metres at 8.2 g/t from 70 metres; and
  • 23 metres at 3.8 g/t from 106 metres.

In addition, a new zone of deeper primary mineralisation returned results of:

  • 16 metres at 5.2 g/t from 240 metres, including 3 metres at 13.5 g/t from 240 metres; and
  • 17 metres at 3.5 g/t from 200 metres, including 4 metres at 11.6 g/t from 211 metres.

At the Lord’s Mining Camp, historical production of more than 250,000 ounces and was only mined to shallow depths of 50-80 metres, with existing resources remaining open along strike and down plunge.

Alto believes there is potential for ‘Lord’s style’ repeat targets along a 3-kilometre-long mineralised corridor as little systematic work has been done to test depth extensions.

Lord Nelson Open Pit

Entitlement offer funds exploration

Alto’s ability to focus on exploration and raise funds has been hampered by ongoing, unsolicited takeover offers, so to fund exploration and drive future value the company has launched an entitlement offer.

The offer gives eligible shareholders the opportunity to acquire new shares through an accelerated pro-rata non-renounceable entitlement issue of one new Alto share for every four existing shares held by eligible shareholders on July 15, 2020 (for retail investors), at an issue price of 7 cents per new share to raise approximately $5.13 million (before costs).

The issue price represents a discount of 6.67% to the closing price of 7.5 cents on July 10, 2020, and a premium of 6.06% to the offer price for Alto shares under the takeover bid from Habrok.

Following the entitlement issue completion, Alto will be able to fully focus on its 10,000-metre exploration program.

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