Kin Mining NL (ASX:KIN) has agreed to sell part of its Cardinia Gold Project in Western Australia to leading mid-tier gold producer Genesis Minerals (ASX:GMD) Ltd for $53.5 million in cash and Genesis shares.
The tenements to be sold include the project’s Bruno, Lewis, Kyte and Raeside deposits and contain mineral resources totaling 610,000 ounces of gold.
This sale will see Kin receive $15 million in cash and 21,917,532 Genesis shares worth $38.5 million that are not subject to escrow for a value of around $88 per resource ounce.
Post-transaction, Kin will hold $17 million in cash and $69 million in Genesis shares, for a total of $86 million in cash and liquid assets.
The sale of 610,000 ounces of Kin’s 1.5-million-ounce total resource inventory, positions the company with an “exceptionally strong” balance sheet and platform for growth, with the ability to further drill out and increase confidence in the remaining 932,000 resource ounces.
The aim is to make these ounces attractive to operating processing plants within effective trucking distances.
This transaction includes access for Genesis and its operating subsidiaries to some of Kin’s retained tenure to facilitate Genesis operations, and Kin retaining access rights over the Kyte and Bruno-Lewis tenements being sold. This will enable Kin to continue exploration over its retained tenements with the Cardinia project.
Unlocking value of existing assets
Kin executive chair Rowan Johnston said: “This is a great deal for Kin and one that resets the bar. The cash will allow us to follow up on some exciting deeper targets, further define our existing resources and evaluate other growth options.
“This puts us in a unique position in the junior WA gold sector with the ability to unlock the value of our existing assets, aggressively target new discoveries and participate in future consolidation.
“We strongly believe in the Leonora consolidation and the work that Raleigh and his team are doing, we look forward to benefiting from this ongoing work through our holding in Genesis, and we are exceptionally well placed to continue to ride the Leonora consolidation train and hopefully make further meaningful contributions to that process.”
Exploration review
Kin has also recently completed an exploration review highlighting several promising and some potentially game-changing targets outside of its existing resource base.
Kin has set aside a budget of $5 million to test these targets over the next six months. Expenditure in the subsequent six months will depend on the initial success and the level of expenditure needed to further drill out the existing resources. The company says a more detailed announcement on these new targets and planned drill programs will be made available in due course.