The Gullewa project in Western Australia has attracted some interest of late both for its high grade gold, silver and copper mineralization and for the wheeling and dealing being done around it.
The project had, just a short time ago, been the flagship of Redhill Resources (RHR-V). Redhill acquired the project, at least mostly, from Sherwin Iron back in the spring of 2008.
But shortly after making a deal for the mine Redhill found finances tight and was forced to bring in Haywood Securities in late 2009 to help it assess some "strategic alternatives", which in this case meant what it always means, selling off assets.
With the crown jewel of its assets being Gullewa it came is little surprise when Australian-based Mutiny Gold (MYG-A) was announced as an acquirer of the asset in July of 2010.
Mutiny would take a 70% stake in the project by paying Redhill AUD$9 million.
There was one problem though, for Redhill to fork over 70% of the project, it first had to have 100% of it.
Redhill had an outstanding balance of AUD$4 million on Gullewa, a sum it owed to Sherwin Iron in connection with its original deal for Gullewa back in 2008.
So to get everything done Mutiny agreed to step in and pay the AUD$4 million on behalf of Redhill and after receiving an extension on that payment, Mutiny made good and sealed the deal at the beginning of August.
But that 70% stake in the project isn't the full extent of the deal. Mutiny can acquire the remaining 30% stake for another AUD$4 million once feasibility is completed. If all of that is completed, Redhill would be left with a 10% net profit interest in the project.
All told that's a lot of fuss, but a total cost of just AUD$13 million to Mutiny.
Not a bad price for a project that boasts measured and indicated resources of 1.7 million tonnes grading 4.18 grams gold 1.03% copper and 6.87 grams silver for 369,000 gold equivalent ounces. The project has another 1.6 million tonnes grading 6.5 grams gold, 3.41 grams silver and 0.48% copper in the inferred category.
And there should be many more ounces on the way. That's because a summer drill program at the projects main deposit, Deflector, showed that mineralization likely extends to the north of the known deposit.
Those results, which were released in June, returned highlight intercepts of 12 metres grading 11.6 grams gold and 2.2% copper; 4 metres grading 8.0 grams gold and 3.3% copper and 3 metres grading 42.1 grams gold and 2.3% copper.
Mutiny says it plans to put out a revised resource estimates after the current RC and diamond drill programs wrap up.
Gullewa sits 450-km north of Perth in Western Australia and 160-km east of the port city of Geraldton.
The Project contains one relatively undeveloped mine at the Deflector deposit, five partially mined open pits and another five areas where historical underground workings have been dug.
More importantly it also includes a 300,000 tonne per year mill, extensive water bore fields and tailings facilities with ready capacity.
The existence of such infrastructure helped bring the capex down in a recent scoping study done on the project. That study came out in February of this year and pegged capex at just AUD$52 million.
For that sum of capital the study outlined a mine that would produce 50,000 oz. of gold, 2,000 tonnes of copper and 34,600 oz. of silver per year with cash costs over the life of mine estimated at AUD$524 per oz.
The mining plan laid out in the study calls for three and a half years of open pit mining followed by at least six and a half years of underground mining.
So after bouncing around for the better part of three years, Gullewa, it would seem, has found a steady hand to guide it into production in Mutiny.
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