THE BOURSE WHISPERER: Kimberley Rare Earths (ASX: KRE) has entered into a convoluted transaction that will result in the company acquire 100 per cent of the Big Springs gold project located in Nevada, in the United States of America.
Stay with us on this – it is circuitous.
Kimberley Rare Earths has signed a binding agreement to acquire 100 per cent of Big Springs Project Pty Ltd (BSP) from its shareholders.
A US subsidiary company of BSP, MRG Copper (MRG), currently has a conditional right to acquire 100 per cent of the Big Springs gold project from Victoria Gold Corp.
Completion of the acquisition by KRE of BSP is conditional on the simultaneous completion of MRG’s acquisition of the Big Springs project.
KRE indicated it had spent the past nine months on the look-out for projects it considered to be suitable for acquisition.
The company said it reviewed more than 40 projects, of which only a handful met its investment criteria.
These included: the potential for early development into a sustainable and profitable project; fit with the distinctive capability and strategic intent of KRE; and provision of a platform for further stepwise growth.
Subject to completion of due diligence, Kimberley Rare Earths claims the Big Springs gold project meets all of these criteria.
“The acquisition of the Big Springs project marks a new beginning for our company and follows an extensive search for suitable projects both in Australia and overseas,” Kimberley Rare Earths managing director Tim Dobson said in the company’s announcement to the Australian Securities Exchange.
“The combination of this new flagship project, together with KRE’s strategy and distinctive capability, is intended to position the company to achieve its goal of rapid growth into gold producer and acquirer of other metals projects.”
The project is located in an established gold mining region, 80 kilometres north of Elko in the north east of the state of Nevada.
Project location in north eastern Nevada, USA. Source: Company announcement
The project’s previous owners, Gateway Gold Corp reported an NI 43‐101 inferred gold resource estimate in 2006.
KRE said its due diligence has been unable to validate the basis of the assumptions and estimates used in that NI 43‐ 101 report and, accordingly, KRE does not intend to rely on it.
The company intends defining a JORC‐compliant resource on the project following completion of the acquisition, however, it also indicated it is uncertain if, following evaluation and/or further exploration, that the existing resources will ever be reported in accordance with the JORC code.
The company warned that should it be able to report a JORC‐compliant mineral resource, there is a risk it may be lower than that reported by Gateway.
With that in mind KRE has negotiated for the final consideration for the project to be dependent on the extent of any JORC‐compliant resource it may delineate.