Yandan previously produced around 350,000 ounces of gold and hosts a JORC 2004 resource estimate of 8.56 million tonnes at 1.5 g/t for 401,000 ounces of gold.
It also includes established mine infrastructure such as power, water dams and access to the Suttor River, tailings and previous plant footprint.
Near flagship GBM project
The project is just 40 kilometres west of GBM’s flagship Mount Coolon Gold Project in the Drummond Basin.
As well as disposing of a non-core asset, completion of the sale will boost the bank balance of Aeris while providing ongoing interest in the project by holding around 7.4% of GBM.
Aeris will also receive a 1.5% Net Smelter Royalty on the first 300,000 ounces of gold equivalent mined from the Yandan tenements.
In consideration for the acquisition, GBM will issue Aeris fully paid ordinary shares to the value of A$3 million while Aeris will subscribe for fully paid ordinary shares in GBM to the value of A$1 million, with any shares issued to be escrowed for 12 months.
GBM, which has closed a conditional placement to raise approximately $5.4 million, is updating the Yandan resource estimate to meet JORC 2012 standards.
The acquisition and placement are subject to the approval of GBM shareholders at the GBM annual general meeting scheduled for November 30, 2020.
Aeris’ executive chairman Andre Labuschagne said: “Whilst Yandan is a non-core asset for Aeris, we have long held the view that the Drummond Basin is highly prospective for gold-rich mineral systems.
"The prospectivity of the Drummond Basin is a view shared by GBM and the taking of an equity position in GBM enables Aeris to maintain exposure to this highly prospective region.”
GBM managing director and CEO Peter Rohner said: “This acquisition represents an important milestone in the company’s Drummond Basin ‘processing halo’ strategy and delivers a step change in the company’s resource base.”
He said GBM would now control JORC (2004, 2012) compliant mineral resources in excess of 700,000 ounces of gold at the Mt Coolon and Yandan projects, predominantly on registered mining leases with established mine infrastructure.
“We also welcome the support and investment by Aeris into GBM to advance this prospective asset, along with the strong support for our placement to advance our Mount Coolon Gold Project,” he added.