PERTH: Catalyst Metals Limited (ASX: CYL) has announced the acquisition of the Old Highway Gold Project from Sandfire Resources Limited for A$32.5 million in cash. The development-ready project, located 40 kilometers southwest of Catalyst’s Plutonic processing plant in Western Australia, is expected to bolster the company’s gold production with low capital intensity.
Key Details of the Acquisition
– Resource Estimate: The project holds a mineral resource of 206,000 ounces of gold, including a high-grade underground component of 140,000 ounces at 4.6 grams per tonne (g/t).
– Production Target: Initial estimates project steady-state production of 35,000 ounces annually over a four-year mine life, with an all-in sustaining cost (AISC) of A$1,588 per ounce at current gold prices.
– Economic Metrics: The net present value (NPV) is estimated at A$280 million (pre-tax) at a gold price of A$5,000 per ounce, with an average annual free cash flow of A$74 million.
The acquisition aligns with Catalyst’s strategy to utilize its underused Plutonic processing plant, reducing development costs by leveraging existing infrastructure. The project’s proximity to the plant allows for efficient ore haulage and lower operational risks.
James Champion de Crespigny, Catalyst’s Managing Director and CEO, said, “Old Highway is another satellite ore source for Plutonic’s processing plant. This acquisition enhances our near-term production profile and brings exploration upside.”
Catalyst identified additional high-grade prospects within the tenement, including Maficanti (12 meters at 16.7 g/t Au) and Cow Hole Bore (22 meters at 5.3 g/t Au), which could extend the mine life.
The acquisition will be funded through existing cash reserves and proceeds from the recent sale of the Henty mine. Catalyst is also in discussions with commercial banks to secure a corporate-level financing facility for further liquidity.
In a related agreement, Catalyst will gain access to Sandfire’s DeGrussa aerodrome, saving an estimated A$15 million in runway upgrades.
Catalyst’s flagship asset is the Plutonic Gold Belt in Western Australia, which currently produces approximately 85,000 ounces per year. The company holds a mineral resource of 3.4 million ounces of gold and maintains a strong balance sheet with A$98 million in cash and no debt.