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
per share.
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.
Background
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.
