MGX Resources has made the Central Tanami gold project the centrepiece of its post-iron ore future, using a $412.1 million cash and investment chest to accelerate drilling, infrastructure upgrades and preparations for underground development in the Northern Territory.
The company’s 50 per cent-owned Central Tanami Project Joint Venture (CTPJV) is preparing to begin the Groundrush exploration decline in the September quarter.
Resource definition drilling is also underway at the Jims deposit, alongside camp and utilities upgrades, recruitment, permitting and metallurgical work.
MGX said the decline will provide underground drilling access and advance future mine development.
MGX chief executive officer (CEO) Peter Kerr said the company’s iron ore exit had protected the balance sheet needed to push the gold project forward.
“Together with the recently announced agreement to divest Koolan Island to logistics proponent Crestlink, this helped MGX preserve its strong debt-free balance sheet, which will enable the business to focus on accelerating the high-grade Central Tanami Gold Project towards a development decision,” he said.
“MGX is well positioned to utilise its hard-earned iron ore cash reserves to realise substantial shareholder value as it seeks to create a new high-quality Australian gold production business.”
The pivot follows MGX’s February completion of the $50 million acquisition of Northern Star Resources’ 50 per cent CTPJV stake; the other half is held by Tanami Gold
An updated project resource totals 31 million tonnes at 2.8 grams per tonne gold for 2.8 million ounces, including 1.2 million ounces at 3.3g/t at Groundrush.
Central Tanami also brings more than 2,100sqkm of joint venture tenure and established infrastructure, including a mothballed 1.2-million-tonne-per-annum processing plant, accommodation camp, haul roads and airstrip.
More than two million ounces of gold have previously been produced from the wider project area. MGX Central Tanami project
MGX’s financial results show the scale of the funding buffer behind that work. Cash and investments stood at $412.1 million at June 30 after the Central Tanami acquisition and subsequent joint venture spending, with no bank borrowings.
Profit before tax and impairments rose to $29.1 million from $20.2 million, although a $58.9 million non-cash Koolan Island impairment contributed to a $30.2 million statutory loss.
Koolan Island nevertheless generated $1 million in positive cash flow for the year after rehabilitation and ramp-down costs, as low-grade stockpile sales outperformed expectations.
MGX has agreed to sell the operation to Crestlink for at least $20.2 million in staged cash payments, a potential further $5 million revenue share, and the transfer of rehabilitation obligations estimated at about $30 million.