29Metals has reached a final investment decision for the Gossan Valley project, part of the Golden Grove copper operation in Western Australia.
Gossan Valley’s potential as a third mining front for Golden Grove has been confirmed, with the project being 29Metals’ second highest grade ore reserve on a copper equivalent basis at Golden Grove, second only to Xantho Extended.
As a result, Gossan Valley is expected to increase production flexibility and extend Golden Grove’s mine life by replacing the declining ore sources at Scuddles – one of the two existing underground mining fronts – for ones with higher grades.
There are also opportunities to extend Gossan Valley’s mineral resources, which remain open at depth.
Other highlights from the 2024 Gossan Valley feasibility study include:
- a 34 per cent internal rate of return
- a seven-year initial mine life
- an average mining rate of 392,000 tonnes per annum
- an average annual production rate of 4000 tonnes of copper and 20,000 tonnes of zinc
- copper recoveries of 90 per cent and zinc metal recoveries of 92 per cent
- a pre-tax net present value of $110 million
- total life of mine capital of $230 million.
“With enabling investment for Xantho Extended largely complete, Gossan Valley is the next logical development option to optimise long-term value at Golden Grove,” 29Metals chief executive officer James Palmer said.
“As the second highest grade ore reserve behind Xantho Extended, development of Gossan Valley optimises Golden Grove’s life-of-mine production profile and enhances overall production flexibility as a relatively shallow and independent mining front.”
To fund its Gossan Valley expansion, 29Metals has launched a $180 million equity raising via a fully underwritten institutional placement and an accelerated pro rata non-renounceable entitlement offer.
The equity raising will be conducted at an offer price of $0.27 per share, representing a 16 per cent discount to the theoretical ex-rights price of $0.32 as of December 2 and 27 per cent discount to last close of $0.37 per share on the same day.
The equity raising aims to reduce 29Metals’ senior debt by $28 million and extend its debt maturities to 2028, supporting production flexibility across its operations.
“Net proceeds from the equity raising and refinancing of senior funded debt facilities provides 29Metals with the balance sheet needed to pursue our strategic objectives,” Palmer said.
“It deleverages the business via a $28 million reduction of senior funded debt and extends maturities of senior facilities from 2026 to 2028. This results in $US74 million ($115.6 million) less repayments over the next two years, improving near term liquidity for the business.”
Of the proceeds raised, $112 million will be used to fully fund the development of Gossan Valley to first ore and $40 million will be allocated to reducing water at the Capricorn Copper mine in Queensland, following the operation being impacted by heavy rainfall between late January and mid-March.
“Gossan Valley is a milestone project for the company, providing production flexibility from an additional and independent mining front, with the potential for future Gossan Valley mineral resources extensions from planned in-mine and near mine exploration drilling, as well as a higher-grade replacement ore source for Scuddles,” Palmer said.
“We remain committed to continuing the ramp-up of the high grade Xantho Extended orebody at Golden Grove, as well as reducing water levels on site at Capricorn Copper.”
Thus far, AustralianSuper and BUMA Singapore have taken up their full pro-rata in the entitlement offer, with AustralianSuper subscribing for an additional $40 million and BUMA $62.1 million.
This has resulted in AustralianSuper holding an 18 per cent stake in 29Metals, and BUMA – a Delta Dunia Group subsidiary – holding a 19.9 per cent stake, both on a pro forma basis.
“The strategic transaction reinforces our commitment to diversification and growth into future-facing commodities and builds on our recent significant acquisitions; entering a binding agreement to acquire a 51 per cent interest in the Dawson Complex in Australia and acquiring Atlantic Carbon Group Inc., the second largest ultra-high-grade anthracite producers in the USA,” Delta Dunia Group president director Ronald Sutardja said.
“This transaction represents a tangible step in Delta Dunia Group’s strategic long-term goal to support the transition to a low-carbon economy, while diversifying our portfolio to align with a more sustainable future.”
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