If all goes to plan, a combined Spartan Resources Ltd and Ramelius Resources Ltd will become a leading Australian mid-tier gold miner following a “transformational combination” in which Spartan will be taken over by the latter to give the Mount Magnet hub a significant inventory boost.
The $503 million deal, to be conducted via a scheme of arrangement that was solidified by a transaction implementation deed during the March quarter, will merge two key yellow metal assets in Western Australia’s Murchison region with the aim of creating a 500,000 ounce per annum operation by (financial) 2030.
Ramelius owns the 1.9 million tonne per annum carbon-in-pulp mill at Mt Magnet, which processes ore from an array of open pit and underground mines that come under the auspice of seven separate projects – Mt Magnet, Cue, Edna May, Marda, Tampia, Symes and Penny.
Combined, they have total reserves of 20Mt grading 1.6 grams/t for 1.1 million ounces.
A lot of the upside for the merged enterprise, though, will come from the Spartan side of the equation and, in particular, Dalgaranga.
Located some 280 kilometres north east of Geraldton (and 65km north west of Mt Magnet), the project has a 2.5Mtpa carbon-in-leach operation currently on care and maintenance on top of a total mineral resource (from a combination of eight open pit and underground ore bodies) of 15.9Mt at 5.61g/t for 2.86Moz.
Including Spartan’s Yalgoo and Archie Rose projects, this total increases to 22.3Mt at 4.39g/t for 3.15Moz.
As it prepares for the looming transaction, the company has wasted no time in trying to boost its mineral inventory while developing underground access, judging from its last quarterly.
For a start, it received significant new gold assay results from infill and extensional drilling at Dalgaranga’s high grade Pepper deposit. These included 25.76 metres at 23.20g/t from 597.66m (with 7.84m at 69.06g/t from 644.8m), 15.42m at 19.44g/t from 583.7m (including 5.24m at 51.71g/t from 686.02m) and 20.65m at 13.82g/t from 579.65m (containing 4m at 61.73g/t from 582.46m).
Meanwhile, the company also announced gold assay results from step-out drilling about 300m south and down dip of the recently discovered Freak prospect, a highlight being 0.29m at 7.94g/t from 813.32m.
Furthermore, infill drilling of the central high grade shoot at Sly Fox completed during the quarter confirmed the thickness and width of the mineralisation. Ongoing drilling will continue to infill and test the western boundary for further strike extensions.
Here, assays returned results like 22.99m at 1.64g/t from 461.22m (with 7.05m at 3.21g/t), 20.6m at 2.75g/t from 277.95m and 16m at 2.36g/t from 250.85m.
All up, Spartan spent $5 million on exploration and evaluation activities during the March reporting period. Of this, about $4.6 million was incurred on surface drilling targeting exploration at Freak and the area north of Never Never, resource definition at Sly Fox as well as infill and grade confirmation drilling at Pepper.
Moreover, a maiden underground campaign was underway, with over 5300m of underground drilling completed at the West Winds gold deposit.
A major surface field campaign is also underway, with around 20,000m planned for the first half of CY2025.
At the end of the quarter, two diamond rigs, and one RC one, were present at site, with 15,630m of drilling completed.
In another development, the Juniper exploration decline continued to advance in line with expectations.
Completion of Juniper South had allowed for underground drilling targeting the West Winds prospect to begin.
By the end of the reporting period, 1758m of underground development was completed as part of an initial 2350m of decline development.
Also, during the quarter Spartan spent $1.2 million on technical due diligence to support the feasibility of Dalgaranga being a stand-alone project.
An integrated study with Ramelius was also launched to determine the optimum use of respective assets in the Mt Magnet area and early cash flow generation for ore mined from Never Never.
Spartan executive chair Simon Lawson said the March quarter marked another huge milestone in the company’s journey, with the transformational combination with Ramelius set to create a leading domestic gold producer with an exceptional asset base.
“Against the backdrop of an uncertain and volatile geopolitical and macro-economic environment, this transaction delivers an exceptional outcome for our shareholders – providing the opportunity to continue on the journey with a significantly de-risked pathway to develop the Dalgaranga project as part of a larger, stronger group,” he explained.
“It has also created a liquidity event, allowing shareholders to crystallise their investment should they wish to do so, backed by the certainty of a fallback recommended takeover offer.
“In the space of two years, we have been able to transform a struggling low grade gold producer with a market capitalisation of around $100 million into one of the best high grade gold growth stories on the ASX with a market capitalisation of over $2.5 billion and, now, an ASX-200 company.”
