RNC to buy Spargos Reward gold project, tables name change

11th May 2020

By: Donna Slater

Features Deputy Editor and Chief Photographer

     

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TSX-listed base and precious metals miner Royal Nickel Corporation RNC Minerals (RNC) has entered into a purchase agreement to acquire the Spargos Reward gold project, in Western Australia.

Spargos Reward contains an historical Joint Ore Reserves Committee-compliant indicated mineral resource estimate of 785 800 t at a grade of 4.4 g/t. The project also has an inferred resource of 151 000 t at a grade of 4.0 g/t.

The miner is also proposing a name change to Karora Resources, which will be voted on by shareholders at its virtual annual general and special meeting on June 11.

RNC’s board of directors and management believes that the time is right to rebrand the company to more accurately reflect its business focus as a growing, profitable gold producer in Western Australia.

The Spargos Reward project includes tenures covering 33 km2 located in the Eastern Goldfields of Western Australia, and about 65 km north of RNC’s Higginsville Gold Operation (HGO) treatment facility by road.

As an advanced exploration project, Spargos Reward shows a significant number of areas flagged for further exploration and development, with the potential to rapidly advance openpit and underground mining.

RNC chairperson and CEO Paul Huet says the potential addition of a near-term high-grade openpit gold project such as Spargos Reward, which is located close to RNC’s Higginsville treatment plant, is a compelling opportunity. “In our view, Spargos Reward has the potential to be fast-tracked into our growing production pipeline and generate substantial cash flow with little risk to RNC and its shareholders.”

He says that the sale and purchase agreement structure enables RNC an exclusive window during which to conduct a thorough due diligence programme over the next three months before making a decision to close the transaction.

Huet adds that RNC has been aggressively working on reducing its costs in Western Australia, making progress restructuring several legacy issues that it inherited on the acquisition of its Western Australia properties.

“The addition of the Spargos Reward project would have the potential to further that progress by improving our per ounce cost structure across our operations. Our shareholders can expect us to continue to aggressively focus on reducing costs, with an all-in sustaining cost target of $1 000/oz sold by the end of 2020.”

The historical high grades at Spargos Reward exceed those at both of RNC’s existing Beta Hunt and HGO gold operations and could provide a higher margin source of feed to RNC’s HGO treatment facility. “This should also enable us to be more selective in our mining at Beta Hunt and HGO.”

Spargos Reward is the same distance as Beta Hunt from RNC’s mill, thereby leading to the expectation that the due diligence process to confirm that these will be higher margin ounces for RNC shareholders, notes Huet.

“Overall, pending due diligence and regulatory and third-party approvals, we view this project as having the potential to be a very accretive addition to our Western Australian portfolio, boosting our operational flexibility. We look forward to closing the acquisition in the coming months,” he concludes.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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