Dundas Minerals (ASX:DUN) has entered into a binding Ore Purchase Agreement (OPA) with Forrestania Resources Limited (ASX:FRS) for the purchase and processing of gold-bearing ore from its 100%-owned Rockland Gold Project (M24/974), located approximately 40km north of Kalgoorlie, Western Australia.

Key Points

  • Binding OPA signed with Forrestania Resources for Rockland Gold Project ore, with an initial term of 24 months and a contractual maximum of 750,000 tonnes
  • Ore to be processed at FRS's Lake Johnston or Edna May processing facilities, with campaigns of between 40,000 and 100,000 tonnes
  • Pricing formula based on ore grade against a base grade of 1.45 g/t Au, metallurgical recovery, and prevailing gold price, with a one-off plant access fee of $50,000
  • Hole 26RKRC011 returned 12m @ 1.25 g/t Au from 168m, including 4m @ 4.87 g/t Au from 200m, with mineralisation remaining open down dip and on strike
  • No Mineral Resource or Ore Reserve has been estimated at Rockland, and the company has not made a decision to mine

Ore Purchase Agreement Commercial Terms

Under the OPA, FRS may purchase eligible ore from Dundas for processing at its Lake Johnston or Edna May facilities, as nominated by FRS. Payment terms provide for a provisional payment of 50%, with the balance paid after each campaign once gold produced has been reconciled. Dundas is responsible for arranging and paying haulage to the nominated facility. Exclusivity under the agreement is limited to ore in an agreed delivery schedule, with ore not scheduled by FRS within 60 days, or not processed within 90 days of delivery, released back. Technical disputes, including on assays and transport-cost calculations, are determined by a binding independent expert. Deliveries remain contingent on the processing plants being available to receive ore.

Related Party Disclosure and Arm's Length Terms

FRS's Executive Chairman, Mr David Geraghty, participated in the company's recent placement and holds a 6.3% interest in Dundas Minerals. According to the filing, the OPA was negotiated on arm's length terms and was approved by the Board. The Rockland Gold Project is subject to a 1.5% net smelter return royalty. The tonnage limit under the OPA is described as a contractual maximum and is not a production target. Any mining and delivery of ore under the OPA remains subject to further drilling, estimation of a Mineral Resource, technical and economic studies, delivery schedule agreement with FRS, and receipt of all necessary regulatory approvals.

Rockland Drilling Results and Planned Activity

Drilling at Rockland has outlined a 1km zone of gold mineralisation in stacked, east-dipping shoots. Hole 26RKRC011, drilled to 234m on the southern Rockland section, intersected two zones of gold mineralisation: 12m @ 1.25 g/t Au from 168m, including 4m @ 2.18 g/t Au from 176m, and 4m @ 4.87 g/t Au from 200m. Results are from four-metre composite samples. The mineralisation extends the interpreted shoots to approximately 170m vertically below surface and remains open down dip. Reported intervals are downhole lengths and true widths are not known. The drill rig is due to return to Rockland within the next fortnight to continue resource extension and definition drilling.