Western Australia-focused Orminex (ASX: ONX) is acquiring Nippon Dragon Resources' (TSXV: NIP) interest in two gold projects in Canada's Abitibi region.
The projects - Rocmec, 35 km west of Rouyn-Noranda, and Denain, 60 km east of Val d'Or - are situated about 230 km apart along Highway 117.
"The increased level of activity we see from both small and large cap companies in the Abitibi region of Ontario and Quebec, both in exploration and M&A, is an indication of the value of the Orminex acquisitions in this world-class jurisdiction," Dean Hely, Orminex's non-executive chairman, said in a news release.
Nippon Dragon's 100%-owned Rocmec project includes the historic Rocmec underground mine (Russian Kid mine), which is currently dewatered, powered and ventilated, giving Orminex access to drill platforms. All three developed levels are accessible, according to Orminex, and many stoping blocks still exist.
Orminex noted that Rocmec is situated between the regional-scale Destor-Porcupine fault zone to the north and the Cadillac-Larder Lake fault zone to the south. The mineralization at Rocmec, Orminex says, is associated with the Labyrinthe Fault system.
The veins at the Rocmec mine, Orminex says, are typical of many shear-hosted narrow-vein gold deposits in the world's Archean greenstone belts, including the Abitibi, Flin Flon, Yellowknife belts in Canada; the Rattlesnake Hills and Seminoe Mountains belts in the United States; and the Pilbara and Norseman-Wiluna belts in Australia.
The last major drilling program at Rocmec was in 2006, according to Orminex, and the project has a historic or non-compliant resource estimate of 570,000 measured and indicated tonnes grading 6.52 grams gold per tonne for 120,000 oz. contained gold.
Rocmec was discovered in 1924. Previous owners completed 23,200 metres of drilling across 166 drillholes from discovery until 1985. No significant exploration was done until 2005, when Nippon Dragon completed 12,300 metres over the next five years.
Nippon Dragon's 80%-owned Denain project hosts two outcropping lodes and the junior explorer has invested about $33 million on the project since 2005. Nippon has the option to earn the remaining 15% interest in the project by spending another $1.09 million.
Under the purchase agreement, Orminex will provide the $1.09 million required for Nippon Dragon to complete its earn-in on Denain, in addition to $5 million in cash paid in instalments. Orminex also agrees to give Nippon a 1% net smelter return royalty on revenue received from certain individual veins at both projects. Orminex then has the option to purchase half of the royalty for $1 million. Under the transaction, Orminex also agrees to provide Nippon with 4,500 oz. of gold within 48 months. The gold can be sourced from the two projects, or from another source (such as purcashing it on the open market), or by cash equivalent.
In conjunction with the deal, Orminex is raising A$8 million ($7.5 million) through the issue of 266.7 million new ordinary shares at a price of 3 ? per share.
In Western Australia, Orminex has two joint-venture projects, Comet Vale, 100 km northwest of Kalgoorlie, and Penny's Find, 50 km northeast of Kalgoorlie.