Kalgoorlie Gold Mining Limited - Spin-out of Ardea's Kalgoorlie-based gold assets

Published: 2021-08-25 11:03:09 ET GRL.AX

Ardea Resources Limited (Ardea) advises on the progress of the proposed spinout of its Kalgoorlie region gold tenements into a new Initial Public Offering (IPO) named Kalgoorlie Gold Mining Limited (KalGold).

KalGold will offer existing Ardea shareholders, and new subscribers to the IPO, exposure to a publicly-listed company with a portfolio of gold exploration assets in the highly gold-prospective Kalgoorlie region of the Eastern Goldfields, WA.

Highlights of the proposed IPO include: Ardea Shareholders to receive an in-specie distribution of 35 million KalGold vendor shares at nil cost, plus have a priority right to subscribe for KalGold IPO shares.

The capital raise to include the issue of up to 60 million new fully paid ordinary shares in KalGold at an issue price of $0.20 per share, raising up to $12 million for exploration and development before IPO costs.

A portfolio of 1,077km2 in 73 tenements with multiple gold drill targets within 150km of Australia's gold capital, the City of Kalgoorlie Boulder, universally accepted as Australia's premium gold destination. Leveraging off an established operations team based in West Kalgoorlie to quickly advance targets post IPO towards production, notably at Bulong

Through this proposed restructure of assets, the Ardea management team has now commenced a Feasibility Study (FS) for the Kalgoorlie Nickel Project (KNP) following the positive Pre-Feasibility Study in 2018 and resource upgrades in 20211. With appreciating nickel demand and price, there is an increasing level of development interest arising from the Strategic Partner process. The previous Ardea demerger and tenement rationalisation exercises have been the successful spin-out of the NSW assets into Godolphin Resources Limited (ASX:GRL) in December 2019, farm-outs of Mt Zephyr and Darlot East and Mulga Plum in 2020 and provisional sale of Bedonia in 20212. 1 ASX releases - 28 March and 2

Ardea Managing Director Andrew Penkethman noted

The current work commitments around the KNP feasibility programs and Strategic Partner process are such that Ardea needs to continue the streamlining of the Company corporate structure which commenced with the 2019 Godolphin spin-out. Ardea and KalGold will become totally separate entities, though will continue to work hand-in-hand through a shared West Kalgoorlie office and most notably, joint access to the immensely valuable Ardea historic drill sample pulp archive. The proposed spin-out will give Ardea Shareholders the choice of either a nickel or gold focus, or as is the Board's intention, continue a significant exposure to both. This document lays out the proposed details of the corporate transactions that will result in the successful listing of KalGold, with some new details regarding the Bulong Taurus gold project and regional exploration strategies.

Ardea Resources Limited (Ardea) is pleased to provide this update on the proposed spin out of its wholly-owned subsidiary, Kalgoorlie Gold Mining Limited through an Initial Public Offering (the Proposed Transaction).

KalGold's development focus will be the major gold-hosting Tectonic Zones of the Kalgoorlie region, being from west to east the Zuleika Shear (ZS), Bardoc Tectonic Zone (BTZ), Mt Monger Goddard Fault (MMGF), Emu Fault (EF), Keith Kilkenny Tectonic Zone (KKTZ) and Laverton Tectonic Zone (LTZ). The Proposed Transaction is subject to various conditions, including approval by Ardea Shareholders at an Extraordinary General Meeting (EGM) proposed for Q4 2021. The Ardea Board is committed to unlocking the significant value held in these Kalgoorlie gold assets, and believe that value accretion is best achieved through the ASX listing of a focused, standalone gold exploration and development company, with dedicated funding and a specialist board and management team. Kalgoorlie Gold Mining Limited is currently a wholly-owned subsidiary of Ardea and will become the IPO vehicle. Included in Kalgoorlie Gold Mining Limited's assets is its subsidiary Yerilla Nickel Pty Ltd which holds the majority of the IPO tenure being transferred to KalGold.

Since its listing in 2017, Ardea has become a significant mineral tenement holder in the Kalgoorlie region with 197 tenements covering 4,333km2, mainly with tenure associated with nickel occurrences within the key Eastern Goldfields of WA Tectonic Zones. Critically, these same Tectonic Zone crustal structures also host significant gold deposits. This dominant Ardea land position has been acquired through detailed project scale and regional data compilation and analysis originally aimed at securing additional nickel tenure for the KNP. This work has in parallel highlighted the gold prospectivity of the KalGold tenements.

Work completed thus far by Ardea has advanced its Kalgoorlie projects to drill-ready. In particular, work programs include re-assay for pathfinders of gold and nickel sulphides within Ardea's vast drill sample assay pulp archive, along with digitally capturing historic exploration data and ground truthing leading to the definition of walk-up drill targets on dominantly granted tenure including Mining Leases (better facilitates the transition to production)

Significantly, KalGold intends to issue its share-holders Loyalty Options on the basis of one free option for every three KalGold shares as registered as at approximately 4 months following listing under a separate loyalty options prospectus. Each free option will have an exercisable price being the greater of a 25% premium to the 5 Day VWAP four months after listing or $0.25, exercisable up to one year after issue. Having received favourable responses regarding the proposed KalGold IPO, Ardea has appointed Joint Lead Managers for the IPO, being amicaa and MST Financial.

The separation of the non-gold Ardea assets and gold KalGold assets will be facilitated through a Demerger Implementation Deed, which is being finalised ahead of lodging an Ardea Notice of Meeting to approve the demerger and the KalGold Prospectus to raise up to $12 million. In due course, this will be available on-line to Ardea Shareholders. Where Ardea has defined nickel-cobalt-scandium resources or advanced nickel sulphide targets, Ardea will remain as the registered tenement holder, with gold rights transferred to KalGold. The two companies will equally share tenement maintenance costs (being Bulong, the Keith Kilkenny Tectonic Zone - Aubils, Boyce Creek-Jump Up Dam and Lake Rebecca prospects, and Perrinvale). Either party may withdraw at any time from the shared rights arrangement, as dependent upon exploration results and strategic focus. Where no nickel-cobalt-scandium resources, KalGold will become the registered tenement holder, with all mineral rights owned by KalGold (being Kalgoorlie, Laverton Tectonic Zone, Pianto South and Davies Dam).

The Management Team will be assisted part-time on a cost-reimbursement basis by Ardea executive director Ian Buchhorn (two decades of Kalgoorlie gold experience as a Registered Mine Manager, managing custom milling campaigns and providing contract grade control, as well as three terms as an elected member on the City of Kalgoorlie-Boulder council). Data Base Management and Tenement Management will be a 50:50 shared arrangement with Ardea's DBM and Tenement Manager whose expertise with the KNP data base and tenements is exceptional. In terms of office location, in view of the initial KalGold exploration focussing on the KNP drill pulp archives and followup field work, it was felt efficient for KalGold to initially share office/warehouse facilities with Ardea's existing West Kalgoorlie operation. As projects evolve towards production, separate facilitates are expected.

Contact:

Andrew Penkethman

Tel: +61 8 6244 5136