Genesis Minerals (ASX: GMD), targeting growth in Western Australia, has purchased the Bruno-Lewis and Raeside gold projects from Kin Mining (ASX: KIN) for C$48 million (A$53.5 million).
The acquisition boosts Genesis’s asset base and underpins its five-year strategic plan due early in 2024, mining analyst Tim McCormack of Canaccord Genuity said in a note to clients on Friday. The deal’s cost-effectiveness is notable at C$79 per resource oz. of metal, he said.
It compares favourably with Northern Star Resources’ (ASX: NST) recent acquisition of Strickland Metals‘ (ASX: STK) Millrose project at about C$158 per oz. and Ramelius Resources‘ (ASX: RMS) acquisition of Musgrave Minerals at around C$182.90 per ounce. The deal involves a payment of C$13.45 million in cash and the issuance of 21.9 million new Genesis shares.
Genesis’s resources will increase by about 4% to 15 million oz. upon completion, and its reserves will stand at 3.9 million ounces. The company aims to progress the acquired projects into reserve status.
“Both deposits have shallow mineralization, low strip ratios and meaningful quantities of oxide ore, which can potentially enable higher milling rates/productivity,” McCormack said in his note.
McCormack expects an update from the company to detail its strategy to reach a targeted production rate of 300,000 oz. per year by September 2026. It is to include a five-year production and all-in-sustaining cost outlook, capital growth requirements, environment, social and governance initiatives, and exploration priorities.
The Bruno-Lewis project, located near Genesis’ 2.9-million-tonne-per-year Laverton mill, contains a Joint Ore Reserves Committee-compliant resource across all categories of 12.06 million tonnes at 1 gram gold per tonne for 408,000 oz. metal. It includes an oxide resource of 3.2 million tonnes at 1.2 grams gold for 119,000 ounces.
The Raeside underground project, close to the 1.4-million-tonne-per-year Leonora mill, comprises a resource across all categories of 3.1 million tonnes grading 2 grams gold for 202,000 oz. It also features an oxide resource component of 600,000 tonnes at 1.9 grams gold for 34,000 ounces.
Genesis managing director Raleigh Finlayson considers Bruno-Lewis and Raeside to be prudent bolt-on acquisitions.
“With more than 12 million tonnes of open-pit resources, Bruno-Lewis has the potential to supplement the eventual, sustainable re-start of our currently idled Laverton mill,” Finlayson said in a news release.
The acquisition is expected to close by March 2024, subject to various approvals, including ministerial consents under the Mining Act.
Genesis says it is well-positioned to fund its growth ambitions with no debt and a significant capitalization.
McCormack expects Genesis to be essentially free cash flow-neutral over the balance of 2024, after assumed capital spending of C$72.5 million and C$9 million on exploration.
At A$1.79 apiece, Genesis shares closed 2.5% higher in Sydney Friday, having traded between A93.5¢ and A$1.91 during the past 12 months. The company has a market capitalization of C$1.8 billion.
