In a strategic move aimed at bolstering its copper and zinc resources, QMines Limited (ASX:QML) has announced a significant milestone – the complete acquisition of the Develin Creek Copper-Zinc Project from Zenith Minerals Limited (ASX:ZNC). This acquisition signals a promising synergy with QMines’ flagship Mt Chalmers Copper and Gold Project and sets the stage for potential combined resource development.
Proximity and High-Grade Potential Drive Acquisition
QMines’ decision to secure the Develin Creek Copper-Zinc Project stems from the compelling proximity and high-grade characteristics of the resource. The project’s location, approximately 90km west of QMines’ Mt Chalmers Copper and Gold Project, positions it ideally for a seamless integration with the company’s existing operations. This aligns with QMines’ strategy of capitalizing on its geographic advantages to foster resource growth.
A Winning Blend for Future Development
The acquisition of the Develin Creek asset underscores its compatibility with QMines’ Mt Chalmers project. The amalgamation of these resources holds the potential for an advantageous blend that could lead to promising prospects in terms of sustainable copper production. This melding of assets is anticipated to form the bedrock for a strategy aimed at creating value and optimizing resource utilization.
Insights from the Management Team
Reflecting on this significant step, Andrew Sparke, the Managing Director of QMines, emphasizes the rapid growth achieved by the company’s copper resources since its listing in May 2021. He underscores the belief that the Develin Creek asset would synergize effectively with QMines’ goals, enhancing the trajectory toward sustainable copper production. Sparke also extends his appreciation to the Zenith Board for their shared vision and support, while welcoming Zenith and its shareholders as significant stakeholders in QMines’ journey.
Accelerating Growth Through M&A
Since its listing in May 2021, QMines has charted an impressive trajectory in expanding its resource base within the Mt Chalmers project. This expansion has been marked by four resource updates, with the most recent unveiling in November 2022. The drive to accelerate growth has led QMines to explore the potential of mergers and acquisitions as avenues for resource augmentation. The acquisition of the Develin Creek asset aligns seamlessly with this growth-focused approach.
Prospects for Exploration and Feasibility
As part of the initial phases of exploration and development at Develin Creek, QMines is set to initiate diamond drilling for updated metallurgical testing. Additionally, reverse circulation (RC) drilling is on the horizon to infill the current resource and explore potential extensions. These activities are poised to contribute valuable insights for the forthcoming feasibility study, which is projected to combine inputs from both the Mt Chalmers and Develin Creek assets. This comprehensive study is earmarked for completion in the first half of 2024.
Fine Print: Acquisition Terms
The acquisition structure entails a two-stage transaction that stipulates QMines’ acquisition of a 100% interest in the Develin Creek project. The consideration for this acquisition amounts to $4.5 million in cash and shares. The initial tranche of 51% ownership is secured for $1.2 million in cash and $1.0 million in shares. The subsequent tranche, representing the remaining 49% interest, requires an additional investment of $1.3 million in cash and $1.0 million in shares, to be completed within a year. The shares acquired will be subject to a six-month escrow period from the date of issuance. There is provision for a downward adjustment of the second tranche payment, pegged at $0.975 million in cash and $0.6875 million in QMines shares. This adjustment can be triggered if a detailed metallurgical study indicates zinc concentrate grades falling below 50% or not being commercially viable at that level.
In Conclusion
QMines Limited’s acquisition of the Develin Creek Copper-Zinc Project stands as a testament to the company’s strategic vision and proactive approach to resource growth. This milestone not only signifies a promising synergy between the acquired asset and QMines’ existing flagship project but also sets the stage for comprehensive exploration and a combined feasibility study. As the company’s portfolio expands, the potential for enhanced resource utilization and production capabilities gains momentum, setting the tone for a dynamic period of growth and development.
