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Junior explorer Minerals 260 (ASX: MI6) has announced it will acquire the Bullabulling gold project in Western Australia from Chinese diversified major Zijin Mining (SH: 601899) in a A$166.5 million ($103 million) cash and shares deal.
Minerals 260, which had A$9.9 million in cash as of September and a market capitalization of A$30 million, plans to fund the purchase through an equity raising managed by Bell Potter Securities and Argonaut. It said that further details would be announced soon.
The company was a spin-off of Australia’s newest lithium producer, Liontown Resources (ASX: LTR), and listed on the ASX in late 2021 following a A$30 million initial public offering. Minerals 260 is chaired by well-known Australian prospector and entrepreneur Tim Goyder, who also chairs Liontown.
Goyder called the acquisition a transformational opportunity in a record-high Australian gold price environment.
“We believe that this opportunity, or this project, will deliver for us, and there’s no reason why we can’t build a substantial company,” he said during a conference call on Tuesday.
Bullabulling, located 65km southwest of Kalgoorlie, was discovered in the 1960s and produced 179,000 ounces of gold under Resolute Mining (ASX: RSG) before it was placed on care and maintenance in 1998. Zijin acquired it in 2014 for A$25 million through its subsidiary Norton Gold Fields.
The project holds a resource of 60 million tonnes at 1.2 grams per tonne gold, totaling 2.3 million ounces.
“We’ve done the deepest due diligence of my career to ensure the resource stacks up,” Minerals 260 managing director Luke McFadyen, formerly of OZ Minerals, said.
The project benefits from proximity to infrastructure, including power, water, and the Great Eastern Highway, along with established mining leases and a Native Title Land Use Agreement.
McFadyen noted the acquisition would position Minerals 260 for rapid growth in the gold sector, leveraging Bullabulling’s potential amid favourable market conditions.
Minerals 260 plans to fast-track development, capitalizing on current gold prices exceeding A$4,000/oz. The company aims to launch 80,000m of drilling to complement the 530,000m previously completed and will focus on underexplored southern areas.
Studies are set to commence by September 2025, with a goal to define a maiden reserve in the north, where 89% of ounces are in the indicated category.
“You won’t see us go slow on this. This is going to be accelerated all the way,” McFadyen noted. He added the project doesn’t require A$4,200/oz gold to be profitable, as pit shells were calculated at A$3,000/oz.
Minerals 260, which had most recently been drilling the Moora copper-gold project in WA, had told shareholders it was actively looking for other opportunities.
After calling a trading halt on January 2, Minerals 260 shares will remain suspended from trading, as the company must re-comply with ASX listing rules due to the acquisition’s scale. A prospectus will be issued for the equity raising, and shareholder approval will be sought at a March meeting.
McFadyen noted the deal significantly changes the company’s scale, making re-compliance necessary. “We’re a A$30 million company buying a A$166 million asset,” he said.
Goyder expressed confidence in replicating Liontown’s success, which recently completed the A$1 billion Kathleen Valley project.
“My phone’s been ringing from engineers, from drilling contractors, all sorts of people wanting to get involved this project, and so we’re just going to be doing the doing now and deliver, deliver and deliver,” Goyder said.
Minerals 260 anticipates resuming trading by late March or early April.
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