TNT Mines Ltd (ASX:TIN) hit a new record high after signing a binding share sale agreement to acquire Warriedar Mining Pty Ltd, which owns the Eureka and Warriedar gold projects in Western Australia, both with a history of gold production.
Eureka and Warriedar have granted mining leases in place on core project areas, have walk-up drill targets already defined and are located close to established infrastructure including operating gold mills.
The acquisition leverages TNT to exploration success with exploration to be carried out under the supervision of a successful WA gold exploration team.
Shares have been as much as 55% higher to 34 cents, which represents a new high for the company.
TNT executive director Brett Mitchell said: “Warriedar stands out as a unique opportunity to acquire two Western Australian gold projects with a history of production that are positioned with immediate access to infrastructure and operating gold plants.”
To support the acquisition and to fund high priority work programs starting this year, the company has received firm commitments from strategic high net worth investors and funds for a placement to raise $3.9 million.
Eureka will be the initial focus of TNT's exploration, containing an existing JORC 2012 indicated and inferred mineral resource of 762,000 tonnes at 1.80 g/t gold for 43,100 ounces of contained gold.
Warriedar considers that the strike and depth potential of the Eureka mineralised system has not been fully tested and hosts potential for additional shallow mineralisation in a strongly endowed mineral terrain.
A drill rig has been secured with a 15,000-metre reverse circulation (RC) drilling program planned to focus on expansion of the existing mineralisation below the current open pit and test the structure to the north and south of the current pit.
At the Warriedar Gold Project, the property package consists of around 45 square kilometres of highly prospective Archaean terrain, with a contiguous tenement package of one core mining lease, one prospecting licence and four exploration leases covering 42 blocks.
The company intends to compile past drilling activity in the mine area and then assess potential for additional targeted RC drilling to delineate high grade (>10 g/t gold) mineralisation.
Warriedar and Eureka gold project locations.
Under the agreement, TNT agrees to make separate offers to each of the 27 shareholders of Warriedar to acquire 100% of their Warriedar shares – with the acquisition conditional on each of the vendors accepting their respective offer.
TNT will issue 29.55 million ordinary shares and 19.75 million unlisted options to the vendors, pro-rata to their existing holding in Warriedar.
The unlisted options will have an exercise price of 25 cents expiring on October 1, 2024, with 10.5 million carrying no vesting conditions and 9.25 million vesting only upon the delineation of an inferred mineral resource of not less than 100,000 ounces of gold at a grade greater than 1.5 g/t gold at the projects.
Board and management changes
As part of the transaction, previous chairman of Spectrum Metals Limited (acquired by Ramelius Resources Limited (ASX:RMS) earlier this year) and current non-executive director of Black Cat Syndicate Ltd (ASX:BC8) Alex Hewlett will join the TNT board as chairman.
In addition, previous director of Spectrum Metals James Croser will join TNT as a non-executive director and Warriedar CEO Matthew Boyes will become TNT CEO.
Mitchell said: “This presents a unique opportunity to join forces with a management team that has a very successful track record in the exploration and redevelopment of ex-production gold assets in WA.
“Given the outstanding value creation they delivered for Spectrum Metals shareholders, Alex and James have developed a strong and loyal following and we are excited by the possibility of recreating their Spectrum success with TNT.”
Eureka Gold Project location plan and regional simplified geological setting.
The share placement to institutional, sophisticated and professional investors will see the company issue 30 million shares at a price of 13 cents each in two tranches.
This will ensure that sufficient funding is in place to undertake near-term exploration programs at Eureka and Warriedar in 2020.
The first tranche of 5,173,287 shares will be issued under TNT’s existing 7.1 placement capacity while the second tranche of 24,826,713 shares will require shareholder approval and will be voted on at the company’s AGM.
Completion of the acquisition is conditional on completion of the placement.
Following completion of the share placement, TNT will have in excess of $5 million in cash with which to fund exploration on the newly acquired WA gold assets and to advance its North American projects.
A reverse circulation (RC) drilling program of up to 15,000 metres is planned to commence at the Eureka Gold Project within the next 4-6 weeks.
Following the completion of that drilling, an RC program is expected to be carried out at Warriedar.
Assay results from both programs will be reported as they become available.
TNT will continue planning and permitting for an initial drilling program at the East Canyon Uranium-Vanadium Project in south-eastern Utah and intends to retain its interest in the Pelley Ridge Zinc Project.