Gold exploration and development company Genesis Minerals [ASX:GMD] has today signed a deal with Kin Mining [ASX:KIN].
Kin will sell part of its Cardinia Gold Project in WA for $53.5 million for cash and Genesis shares.
The buyout is one of a string of acquisitions Genesis has made in the past 18 months as the company quickly shifts from a budding explorer to a mid-tier gold producer.
Shares in Genesis are up by 11.1%, trading at $1.85 per share, as investors are excited about Genesis’ moves to secure the Leonora District in WA as its fiefdom.
It’s been a strong year of growth for Genesis, which has a market cap of $2 billion. Its shares have risen by 37.5% in the past 12 months, outperforming the sector by 35.2%.
Source: TradingView
The Leonora lockup
Kin is not selling its total assets in the area but is offering the Bruno-Lewis and Raeside Gold Projects in Leonora.
The final deal includes $15 million in cash and 21,917,532 new Genesis shares worth $38.5 million.
Open pit Mineral Resources across the two projects totals 15.7 Mt @ 1.2g/t for the 610koz.
That puts the deal’s value around $88 per resource ounce for the 610,000 gold ounces.
Kin will retain 932,000 ounces of resources in the area and described the sale as an opportunity to ‘aggressively target new discoveries and participate in future consolidation’.
For Genesis, their path of acquisitions has made it clear that they want to lock up assets in the Leonora district to unlock value.
Previous takeovers, such as its purchase of down-and-out Dacian Gold in October, gave it access to nearby gold mills. This progressed its goal to become a miner quickly.
Managing Director Raleigh Finlayson said the Kin assets were prudent bolt-on acquisitions for Genesis.
‘With more than 12Mt of open pit Resources, Bruno-Lewis has the potential to supplement the eventual, sustainable re-start of our currently idled Laverton mill,’ he said.
‘Raeside offers supplementary high-grade open pit ore to our Leonora mill just 10km away.’
‘We look forward to reporting maiden Reserves for these new, value-add deposits and bolting them into our five-year outlook, to be unveiled in the new year.’
Source: Genesis Minerals
The deal will also include access for Genesis to some of Kin’s retained tenure to facilitate operations.
Kin will also retain access rights to the two tenements being sold on, and allow Kin to continue exploration in the area.
Outlook for Genesis
With these two purchases, Genesis has a clear pathway to restart its currently idled Laverton Mill, which is around 60km away.
The purchases are all part of its ‘Open for business’ strategy to produce +300koz per year of high-quality gold from the Leonora District.
The next steps from here will be to optimise the life of the mines and improve the margins for its future mine plans.
Thankfully, both resources are relatively shallow and should be achievable with the high price of gold.
Source: TradingView
Looking into 2024, gold prices are widely predicted to rise in the medium term. The Fed’s rate-easing policies should be supportive of increasing gold prices.
The decline in real rates is usually very positive for gold to run, with some analysts forecasting US$2,200 by the end of 2024.
Another factor that could be positive for gold is geopolitical risk. Tensions between the West and BRICS members could also push prices as investors hedge in the safety of gold.
Whatever direction gold heads in the new year, Genesis should be one to put on your watchlist as its meteoric rise continues.
Other miners to watch in 2024
Junior miners have had it rough in the past year. Facing depressed commodity prices, many players can’t seem to catch a break.
But with trouble comes opportunity. Today, in the market, massive resource holders are worth cents.
Mining juniors that could be holding some of the largest reserves in the world in a range of minerals can be collected at discounts unseen in 50 years.
While uncertainty remains high, gold miners are having a field day.
As cautious investors hedge in gold, ASX miners are standing out as great picks to consider to balance a portfolio and diversify your holdings.
Want to know which critical minerals to look for in the next boom or what Aussie miners are holding the keys to our tech future?
Click here to learn more about the opportunities that may present in the next mining boom.
Regards,
Charlie Ormond
For Fat Tail Daily
