G Mining Ventures (GMIN.TO) announced earlier this month it had entered into an agreement with BHP to acquire 1,900 square kilometers of land tenements in the Gurupi gold belt, which includes the CentroGold project. CentroGold currently contains 1.7 million ounces of gold in the indicated category and an additional 0.6 million ounces in the inferred resource category. This resource was established using the data of approximately 135,000 meters of drilling. The total consideration for the acquisition is the issue of a 1% NSR on the first million ounces of gold, increasing to 1.5% for all subsequent ounces. A good deal for G Mining Ventures as no upfront capital is required to acquire the project. From BHP’s perspective, it likely doesn’t care on a – for them – relatively small gold project, and obtaining a NSR could be valuable in the future.
The project originally was owned by Oz Minerals, which was acquired by BHP. Oz Minerals released a pre-feasibility study on the asset showing an average production of 100,000-120,000 ounces of gold per year during a 10 year mine life, but with a very high 190,000-210,000 ounce production per year in the first two years of the mine life. As G Mining is currently ramping up production at the Tocantizinho gold mine, it can use the knowhow to develop the CentroGold project.
Disclosure: The author has no position in G Mining Ventures. Please read the disclaimer.
