Kin Mining NL (ASX:KIN) is progressing a planned merger with PNX Metals Ltd (ASX:PNX) and this strategic consolidation will create a robust, diversified Australian mineral resources business with gold, silver, base metals and uranium assets in Tier-1 jurisdictions as well as a new name – Patronus Resources Ltd.
Patronus will have total mineral resources of more than 1.4 million ounces of gold, 16.2 million ounces of silver and 177,000 tonnes of zinc, a market cap of ~A$92 million, cash and liquid investments of ~A$84 million and no debt.
Providing plenty of upside is a strong platform of projects with near-term expansion potential and a pipeline of exploration assets in Western Australia and the Northern Territory in gold and silver, base metals and uranium.
Complementary skills
Supporting the asset potential is a highly experienced board and management team from both companies with complementary skill sets and a proven track record of value-creation and accretive transactions.
The merger is scheduled to be completed by September 11, 2024, subject to approvals, and is to be implemented by way of a Scheme of Arrangement in which Kin Mining will provide one share for every 13 PNX shares held at the record date.
KIN plans to hold an EGM to vote on the proposal on August 22 and a PNX scheme meeting has been scheduled for August 27.
Independent directors of KIN have unanimously recommended the scheme in the absence of a superior proposal while PNX independent directors have unanimously recommend the scheme and intend to vote all their PNX shares in favour in the absence of a superior proposal.
Board composition
The merged board will comprise existing KIN directors Giuseppe Graziano and Nicholas Anderson alongside current PNX chairman Graham Ascough.
Dual directors Rowan Johnston and Hansjoerg Plaggemars will continue on the merged board with Johnston to remain as executive chairman while the search for an appropriate CEO takes place.
The combined knowledge of NT and WA field teams will be merged and drilling campaigns shared to suit seasonal restrictions, which will provide greater flexibility of work programs.
Patronus’ projects in the Leonora region of WA and Pine Creek region of the NT offer consolidation and growth opportunities.
Gold bounty
There are already group-wide gold resources of 28 million tonnes at 1.35 g/t for more than 1.4 million ounces, including 932,000 ounces in the Leonora region and 283,000 ounces in the Pine Creek region along with gold at the nearby Hayes Creek Project.
The two primary deposits at Leonora are Mertondale with 11.7 million tonnes at 1.22 g/t for 457,000 ounces and Cardinia East’s 10.4 million tonnes at 1.42 g/t for 475,000 ounces.
Leonora has historically produced 274,724 ounces at 4.73 g/t but there has been minimal exploration in the past 10 years.
Drilling is underway at Mertondale to upgrade the existing resources with a mineral resource estimate update expected in December 2024 while drilling is also being carried out at Cardinia East where mineralisation remains open.
A mining proposal has been approved for Mertondale and one is close to approval at Cardinia East.
Pine Creek hosts the Fountain Head & Tally Ho deposit with 2.9 million tonnes at 1.7 g/t for 156,000 ounces, Glencoe deposit with 2.1 million tonnes 1.18 g/t for 79,000 ounces and Mt Porter’s 700,000 tonnes at 2.2 g/t for 48,000 ounces.
These three near-surface deposits have immediate expansion potential and regional upside.
At Fountain Head, an Environmental Impact Statement has been approved and a Mine Management Plan is pending.
Glencoe is just 3 kilometres north of Fountain Head, is on a granted Mineral Lease and 77% of resources are in the measured or indicated categories.
At Mt Porter, which is 50 kilometres southeast of Fountain Head and on a granted Mineral Lease, 84% of resources are in the indicated category.
Base metals
Patronus will have base and precious metals endowment at Hayes Creek with 4.1 million tonnes at 4.35% zinc, 124 g/t silver and 1.8 g/t gold while there are also encouraging VMS signs at Leonora where drilling has returned 5.7 metres at 5.3% zinc, 40 g/t silver, 1.0 g/t gold, 0.3% copper and 0.3% lead from 270.3 metres.
Hayes Creek has the Mount Bonnie and Iron Blow deposits with immediate expansion targets at depth and along strike at both along with strong regional prospectivity at the latter.
Mount Bonnie is a proposed open pit development with 90% of the 1.55 million tonnes resource in the indicated category while underground mining is proposed for Iron Blow where 85% of the resource is in the indicated category.
The first-ever base metal discovery within the Minerie Domain in which the Leonora Project sits, will provide the merged entity with plenty of encouragement and reverse circulation drilling is set to being at high-priority targets in Q3 2024 following IP surveys.
Uranium opportunity
Uranium is another opportunity that will be investigated with the Pine Creek Project being within one of the world’s largest and richest uranium provinces.
The Thunderball Uranium Deposit was discovered by Thundelarra Exploration, which delivered a maiden JORC-2004 compliant resource estimate in 2011.
This project has seen limited exploration since 2011 and has remained essentially dormant since 2014. Gap analysis by SRK Consulting has highlighted significant potential to extend high-grade mineralisation and make further discoveries regionally at a time of strong uranium prices, which increased from ~$28/pound in 2014 to more than $100/pound in 2024.
Drilling at Thunderball and regional targets is planned for September 2024, with co-funding received from the NT Government for a deep drill hole down-dip of the historical mineral resource. Work is planned to upgrade the resource to JORC-2012 standards along with exploration around Hayes Creek in a bid to identify new uranium prospects.
Multi-pronged work programs are expected to be carried out by the merged entity to underpin accelerating news flow.