MT GUNSON – STRATEGY

Gindalbie has come to an agreement with Terrace Mining Pty, a wholly owned subsidiary of Torrens Mining Ltd, to enter the Mt Gunson Copper-Cobalt Project via Farm-in and Joint Venture. The proposed farm-in structure provides a low-cost entry opportunity for Gindalbie to develop an economically robust project in one of the world’s premium copper belts.

The Mt Gunson Project represents a strategic fit for Gindalbie as a low-cost entry to the base metals sector and as a potential platform for future growth. The scale, risk, location and growth potential of the Project were significant considerations in Gindalbie’s decision to participate.

The Project’s substantial tenement holding in a favourable location in close proximity to major established copper operations, such as Olympic Dam and Carrapateena, provide significant scope for exploration and resource growth. The potential to apply novel leaching technologies to the unique sulphide characteristics of the Mt Gunson mineralisation also provides scope to realise additional value from the Project.

Given our existing in-house capabilities and access to experienced specialist skillsets in the market, Gindalbie believes the most value can be added during the feasibility stages of the Project, by progressively demonstrating a viable path towards commercialisation. The results-based staged farm-in structure also provides Gindalbie with the flexibility to actively manage risk exposure.

 

Mt Gunson development strategy

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Financial strategy

The farm-in will be implemented in stages to minimise risk and optimise feasibility progress. Expenditure will be focused on completing pre-feasibility and definitive feasibility studies over the Project as well as conducting additional exploration over the tenement package.

Gindalbie’s interest will be earned in the following stages:

 

Stage 1: Test work and flow sheet design:

  • Gindalbie will spend A$1.37 million during the first 12 months to earn a 25% beneficial interest in mineral exploration licences EL 5636, EL 5333 and EL 5108 and associated rights under the Farm-in Agreement (Joint Venture Interest).
  • Funds during Stage 1 will be directed towards addressing key project risk areas, primarily related to ongoing processing and flow sheet work.
  • Should Gindalbie elect to exit the farm-in at the end of Stage 1 then Gindalbie will retain a 25% Joint Venture Interest.

 

Stage 2: Study phase:

  • Should Gindalbie elect to continue with the farm-in after Stage 1, Gindalbie will spend an additional A$2.5 million to earn an additional 26% Joint Venture Interest (51% Joint Venture Interest in total). Gindalbie must undertake this work within a maximum of 4 years from the farm-in commencement date in order to earn the interest.
  • Should Gindalbie elect to not continue with the farm-in after Stage 2, it will retain a 49% Joint Venture Interest.

 

Stage 3: Study phase to decision to mine:

  • Should Gindalbie elect to continue with the farm-in after Stage 2, Gindalbie can earn an additional 19% Joint Venture Interest (70% Joint Venture Interest in total) by spending a further A$2.75 million. Gindalbie must undertake this work within a maximum of 6 years from the farm-in commencement date in order to earn the interest.
  • If at any point during the feasibility study process, Gindalbie spends a total of A$6.62 million, Gindalbie will automatically earn a 70% Joint Venture Interest.
  • At the completion of Stage 3, Gindalbie will have the option to purchase an additional 5% Joint Venture Interest for A$1.5 million to increase its total Joint Venture Interest to 75%.
  • Terrace will be free carried to a maximum of A$8.62 million, exclusive of the above option value. Once the free carry limit has been reached (or Gindalbie exits from the farm-in after Stage 1 or upon a decision to mine) a formal unincorporated joint venture will be triggered and Terrace will be responsible for its share of ongoing project expenditure. The amounts and timeframes stated above are indicative of Gindalbie’s contractual commitments within the farm-in. Actual timeframes and costs required to progress studies at Mount Gunson may vary based on operational requirements.