Classic Minerals’ share price skyrocketed over 290 per cent during intraday trading after news the company had secured a cash injection worth up to $10 million to take its flagship Kat Gap gold project in WA to production. The deal saw over 200 million securities exchange hands, representing nearly all of its shares on issue as punters clamoured to get in on the action.
Shares in the ASX-listed explorer opened at .022c before reaching a high of .064c during trading. Prices had closed at .016c on Thursday.
As part of the agreement Perth-based private mining operation Goldvalley Brown Stone will inject up to $10 million in non-recourse funding for the extraction and processing of gold at Kat Gap.
Classic’s Kat Gap deposit boasts a 93,000-ounce mineral resource at 2.96 grams per tonne gold and is the principal contributor to the company’s total gold inventory of just over 400,000 ounces.
The term sheet will see the company and its financial backer split the revenues minus the cost of gold production at Kat Gap 70/30 in favour of Classic.
Classic Minerals’ Chairman, John Lester said:“Classic’s development finance strategy is to reach earliest possible production at a low Capex whilst minimising dilution and maximising shareholder value. This pathway provides revenue generation while final approvals for Classic’s Gekko modular and scaleable gold processing plant is awaited.”
The deal follows a flurry of high-grade RC strikes at Kat Gap that form part of a more extensive 109-hole infill drilling campaign at the operation.
Notable hits include a 1m section grading 40.1 g/t gold from 33m within a broader 2m intercept running 21.07 g/t from the same depth.
Another hole intercepted a 2m section at 17.2 g/t gold from 53m and included a higher-grade 1m hit grading 19.9 g/t from 53m.
The quality results follow a robust set of assays reported at the start of August. Standout hits from the series include 1m hit going 19.4 g/t gold from 44m within a 3m intercept at 7.04 g/t from 43m and 1m running 17 g/t from 34m within a 3m strike grading 13.23 g/t from 32m.
Kat Gap houses a shallow unmined gold deposit that was first uncovered in the 1990s. The deposit caught the attention of several miners, including Sons of Gwalia, who completed a resource estimate and scoping study at the site.
The deposit sits within a 5km-long geochemical anomaly that has to date, only been subjected to limited drilling.
Classic has been on a mission to commence production at Kat Gap as soon as possible and recently purchased a mobile processing plant called “Gecko” to facilitate early work.
Last year the company received state approval to excavate up to 49,000 tonnes of material from Kat Gap to fine-tune the processing plant and optimising pit design at the project.
The $10 million cash injection now drives the company even closer to full-scale gold production at Kat Gap –which would be an achievement worth celebrating.
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By Matt Birney
