QMines Ltd (ASX:QML) has moved to fully acquire the high-grade Develin Creek Copper-Zinc Project, which the company believes will offer immediate opportunities to synergise with QML’s Mt Chalmers Copper-Gold Project.
The company is also raising $3 million in additional funding through a fully subscribed share placement plan, which it says has been carefully sized to avoid shareholder dilution and maximise returns.
An acquisition term sheet with Zenith Minerals involves a cash and shares consideration of $4.5 million in a two-staged transaction, with the initial interest of 51% acquired for $1.2 million in cash and $1.0 million in shares and the additional interest (49%) to be acquired for a further $1.3 million in cash and $1.0 million in shares within 12 months.
Develin Creek acquisition
Develin Creek sits about 90 kilometres west of the flagship Mt Chalmers Project and holds a mineral resource (inferred and indicated) of 4.9 million tonnes at 1.79% copper equivalent for about 87,000 tonnes of copper equivalent.
“Since listing in only May 2021, the QMines team has rapidly grown its copper resources at the Mt Chalmers project,” QMines managing director Andrew Sparke said.
“We always believed that the Develin Creek asset was very complementary and would provide the scale required to progress the Mt Chalmers project towards sustainable copper production.
“We wish to thank the Zenith board for sharing our vision of a larger, combined copper business and for their patience and assistance with the transaction.
“We would like to welcome Zenith and their shareholders to the register as large owners in our company.
“We look forward to working closely with you as we test several exciting exploration targets and prepare the company for potential future production.”
Initial drilling program
QML intends to undertake an initial drilling program at Develin Creek to increase the resource estimate confidence to higher categories, update the metallurgical understanding of the project and test for mineralised extensions.
The second tranche payment may be adjusted down to $975,000 in cash and $687,500 million in QMines shares, if a detailed metallurgical study shows zinc concentrate grades below 50% or that a 50% zinc concentrate grade is not commercially achievable.
This project will be incorporated into the Mt Chalmers pre-feasibility study (PFS) which QMines expects to release in the first half of next year.
Share placement
QMines also received firm commitments to raise $3 million in a share placement, well exceeding the original capital raise target of $2 million.
“It is pleasing to see such strong demand for the placement which demonstrates the quality of the Mt Chalmers project, together with the acquisition of the Develin Creek project, augmenting the company’s aggressive growth strategy,” Sparke commented.
“We wish to thank new and existing shareholders and our brokers, Whairo Capital, for their continued support of the company as we demonstrate the potential scale of the company’s copper projects through ongoing exploration.”
Sparke personally subscribed for $100,000 worth of shares in the placement.
The funds will be used to fund the initial 51% interest in the Develin Creek Project, exploration at the Mt Chalmers and Develin Creek projects, continuation of the PFS and for general working capital.