Strickland Metals Ltd (ASX:STK) is acquiring the 5.44-million-ounce gold equivalent Rogozna Gold Project in the globally significant Tethyan Metallogenic Belt in Serbia — a project that presents “excellent potential” to grow into one of the largest undeveloped gold deposits globally.
The Rogozna Project comprises four exploration licences covering around 184 square kilometres in the Trepca mining district in the southern Republic of Serbia.
The project contains a JORC-compliant inferred mineral resource totalling 5.44 million ounces of gold equivalent comprising 2.96 million ounces of gold, 214,000 tonnes of copper and 364,000 tonnes of zinc, and has additional significant exploration potential defined by more than 100,000 metres of historical drilling.
Further exploration upside includes clear resource expansion opportunities with numerous high-quality targets yet to be drilled, including very strong potential for significant copper-gold porphyry mineralisation.
"Perfect opportunity"
“We are thrilled to announce the acquisition of the large-scale, 5.44-million-ounce gold equivalent Rogozna Project," said CEO Andrew Bray
"We obviously have an exceptionally strong cash position for an exploration company and Rogozna represents the perfect opportunity through which we can deploy some of that additional balance sheet strength to deliver substantial additional value for Strickland shareholders."
Drilling plans
On completion of the acquisition, Strickland intends to immediately undertake substantial resource and exploration drilling across each of the four defined deposits/prospects, focusing on high-grade mineralisation zones and new discoveries.
A 60,000-metre diamond drilling campaign will be undertaken through to late 2025 and the company intends to utilise a minimum of three diamond rigs, with drilling of the primary targets at the Shanac, Medenovac, Gradina and Copper Canyon prospects.
Strickland says the acquisition represents an excellent complement for its Yandal Gold Project, at which drilling has just recommenced with drilling plans for 2024 at Yandal unchanged.
The company remains “extremely well-funded” to advance exploration at both the Yandal and Rogozna projects, with cash and Northern Star Resources (ASX:NST) shares totalling around $54 million at the end of the December quarter.
The transaction
The total acquisition cost of approximately $37 million will be completed primarily via the issue of STK shares with an 18-month escrow period.
Strickland signed a binding share sale and purchase agreement (SPA) with ISIHC Ltd, a subsidiary of Ibaera Capital Fund LP, for the acquisition of all of the issued capital of Betoota Holdings Ltd. Betoota is the owner of Zlatna Reka Resources, which owns the Rogozna Project.
“Leverage to improving gold price”
“The acquisition is being conducted primarily via the issue of escrowed Strickland scrip, with the acquisition representing ~19.4% of the post-transaction capital structure. We see the project as offering tremendous leverage to a rapidly improving gold price environment," Bray said.
“In our view, the project has the potential to grow into one of the largest undeveloped gold deposits globally (with significant copper and zinc), making it precisely the type of asset that will attract very compelling valuations as the project advances.
“The incredible upside that Rogozna offers (from an already impressive base) is something that is quite rare in this industry. In particular, the potential for significant copper-gold porphyry mineralisation outside of the main prospect areas could be a tremendous bonus as exploration programs unfold.
“Serbia is a well-regulated, established mining jurisdiction, currently being the second-largest copper producer in Europe. Additionally, a number of global majors have significant Serbian projects, including BHP Billiton (LON:BHPB), Rio Tinto (ASX:RIO), Vale, Zijin Mining, Kinross Gold and Dundee Precious Metals.
“In the mid-cap space, Adriatic Metals has paved the way for exploration companies operating in the region. Adriatic listed in 2018 at a share price of A$0.20, and has now grown into a company with a market capitalisation of over ~A$1 billion with a share price of ~A$4."
Executive changes
With the acquisition the company will make changes to its board and management team, These include the proposed appointment of Paul L’Herpiniere as managing director and Dr Jon Hronsky as non-executive director at the conclusion of the transaction. Andrew Bray will retire as CEO, however, will remain as a consultant.
“Having both Paul L’Herpiniere and Dr Jon Hronsky agree to join Strickland is a major coup for the company," Bray said.
"Prior to his recent career in private equity, Paul had high-level experience with Fortescue (ASX:FMG) Metals Group, Gold Fields and Anglo Platinum, while Dr Hronsky is one of Australia’s leading geoscientists.
"Both are very well acquainted with the project, having been closely involved in its development since 2019. The project also comes with an exceptional team of 22 local Serbian staff on the ground.
“As the outgoing CEO (and largest shareholder) of Strickland, I couldn’t be happier and more confident in the team to take the company forward.
"In my view, Strickland now has one of the best management and exploration teams around, along with two outstanding projects and the balance sheet strength to fully extrapolate maximum value from the portfolio. This is the ideal recipe for a very promising period of STK’s development, especially given the strong outlook for gold prices.”
"Enviable position for growth"
Strickland chairman Anthony McClure said, “I would like to sincerely thank Andrew Bray for his extraordinary skill and effort as chief executive officer in taking the company from effectively a shell company to what it is today.
"Andrew’s diligent leadership and enterprise has created significant value from the Yilgarn assets and has led to the company’s success without peer in our market. With our strong balance sheet including significant cash and liquids, the company is in an enviable position for growth.
"Andrew has been the pioneer in leading the company into the Serbian acquisition and we now look forward to our next level of value-add with this world-class asset.”