Gunson Resources completes placement, undertakes a 1:5 entitlement offer
Gunson Resources (ASX: GUN)
has completed a placement to raise $300,000 before costs and will
undertake a non-renounceable entitlement offer of 1 for 5 also at $0.017
The major focus is to bring its ‘construction ready’ Coburn Heavy Mineral Sands Project in Western Australia into development with a strategic partner.
The entitlement offer will seek to raise to raise A$928,455 for a maximum of 54,615,001 shares and is partially underwritten by managing director William Bloking, up to $100,000.
Proceeds will also go towards working capital for operations and maintain permits and tenements through to June 2015 and as Gunson seeks the entry of, a strategic partner to assist with or take over development of the Coburn Mineral Sands Project in Western Australia.
In addition they will support the activities of Torrens Mining Limited (parent company of Terrace Mining Pty Ltd) in its effort to establish the feasibility of producing Copper, Cobalt and Silver metal from the MG14 and Windabout deposits at Mount Gunson.
Gunson aims to mine the Coburn heavy sands deposit in Western Australia, and has formally launched a farm-in with Terrace Mining to study the feasibility of producing copper, silver, and cobalt metal from shallow deposits at Mount Gunson in South Australia.
The deal with Terrace Mining will see Terrace spend $2.5 million on a bankable feasibility study for mining of the shallow open pittable MG14 and Windabout deposits excised from the joint venture Gunson has with Noranda Pacific.
A proposed flow sheet is currently being tested by Terrace that utilises cyanide to leach copper and silver. Early tests show 90% copper recovery into solution.
Dissolution of the copper and silver is the first step to produce saleable metal or metal salts at the minesite. Indications are that this route will significantly improve the value of the Mount Gunson Project.
MG14 and Windabout contain identified JORC resources of 209,680 tonnes of copper with significant cobalt and silver credits. Conceptual potential exists for a Life of Mine of up to 17 years that outputs 9,000t of copper per year plus cobalt and silver credits.
Conceptual studies indicate that the project has potential to generate annualised copper revenues of ~$76 million plus cobalt and silver credits.
Peer group analysis indicates that Gunson’s 49% interest in the Terrace Joint Venture after the farm-in phase will carry a conceptual valuation of $0.14 per share on commencement of mining operations.
A rapid recovery in the zircon market in 2014 has brought the Coburn Heavy Mineral Sands project (100% owned) back into focus. A definitive feasibility study was announced in January 2010 and an optimisation study completed in February last year. Final mine permitting is expected in the current calendar quarter. Coburn carries a Resource of 979 million tonnes and JORC Reserve of 308 million tonnes at a grade of 1.2% heavy minerals.
Coburn offers a driver for valuation uplift for Gunson given than it is construction ready and that discussions for project funding are continuing.
On 27th February 2014, the executive chairman of major producer Tronox advised of a very strong rebound in zircon sales in 2014 and he, along with UBS, expect a volume led recovery to begin mid-2014 for titanium feedstocks.
This will be driven by higher plant utilisation and inventory drawdown from pigment producers, putting upward pressure on feedstock volume/price, and demand-led recovery for zircon.
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