Why Kalamazoo Resources Share Price is Up Over 40% Today (ASX:KZR)
Kalamazoo Resources Ltd [ASX:KZR] shares are up today over 41%. At time of writing, the KZR share price was trading at $68.5 cents, up from $48.5 cents yesterday.
Kalamazoo is an Australian gold and base metals explorer and developer with projects in Victoria and Western Australia.
Why did the KZR share price react today?
Kalamazoo is buying the Ashburton gold project from Northern Star Resources Ltd [ASX:NST] for a deferred contingent cash consideration of $17.5 million.
The project sits at the southern edge of the Pilbara Craton in Western Australia. The 217 squared kilometres project includes a self-contained camp with core farm, supporting infrastructure, and 4G access.
According to the terms of the deal, Kalamazoo will pay $5 million for the first $250,000 tonnes of ore mined and a 2% Net Smelter Royalty (NSR) on the first 250,000 ounces of gold produced.
There will also be a NSR on any additional gold produced and the same NSR will apply from any metals the tenements produce.
So far, Ashburton has generated 350,000oz of gold and has a JORC Code (2012) mineral resource estimate of 20.8Mt @ 2.5 g/t Au for 1.65Moz.
Kalamazoo’s Chairman and CEO Luke Reinehr had this to say on the deal today:
‘Prior to listing on the ASX, we held a large exploration tenure alongside Northern Star and its Paulsens Gold Mine. This has assisted us in identifying the inherent value of the nearby Ashburton Gold Project and we thank Northern Star for the acquisition opportunity and the deal structure that enables us to put our funds directly into exploration.’
Kalamazoo described the project as an ‘important addition to Kalamazoo’s Pilbara gold assets. In a similar investment strategy to the acquisition of its flagship Castlemaine Gold Project in Victoria in 2018, the deal structure enables Kalamazoo to invest funds directly into the ground.’
What could happen next?
Kalamazoo isn’t thumb twiddling.
The company is starting exploration at Ashburton straight away to increase the 1.65Moz oxide and sulphide gold resource, and advance project development plans. Kalamazoo’s Western Australia Director Paul Adams will be leading the exploration team.
The Kalamazoo share price reacted today to the news by boosting over 41% higher.
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