Smallcap gold miner Anova acquires 945Koz gold play in WA; name to change to Lustre Metals

Shares for smallcap ($27m) gold miner Anova Metals (ASX:AWV) are defying a red Monday on the ASX as the company today announces its acquisition of two gold projects in WA through the purchase of privately held DC Mines Pty Ltd, a company registered in Perth. 

DC Mines’ Golden Dragon and Fields Find gold projects collectively boast a gold resource of 945Koz gold, with 461Koz being in the mid-confidence level Measured & Indicated classification. 

All in all, the two projects alongside Anova’s existing projects give the company a global resource of 1.95Moz of gold. Anova holds gold projects in WA, and Nevada, USA. 

As far as Anova’s WA strategy is concerned, Golden Dragon and Fields Find will now join the Warriedar project to boost Anova’s WA landholding to 804km2 overlying part of the Yalgoo-Singleton and Warriedar greenstone belts. 

The projects are located 60km north of Capricorn Metals’ (ASX:CMM) Mt. Gibson gold project, which boasts historical gold output of 868Koz of gold. 

Also nearby is Silver Lake’s (ASX:SLR) Rothsay gold mine, and, 29Metals’ (ASX:29M) Golden Grove gold mine. 

Existing knowledge shallow in nature 

Worth noting is that Anova highlights existing drilling at Golden Dragon and Fields Find has hit an average depth of only 42 metres; relatively shallow as far as hard-rock gold exploration can go. 

What few deep drillholes have been sunk in the past have returned evidence of mid-to-high grade gold at depths of over 400m. 

Once the deal is signed off, Anova will move ahead with an aggressive drilling campaign between now and early 2025, which the company is confident will only increase the existing mineral resource estimate, enhancing bankability for the project. 

When it does so, Anova will be operating under a different name. The company has today flagged its intention to become Lustre Metals, under the code LUS. 

What is Anova paying?

Anova Metals (soon to be Lustre) is purchasing the projects off of DC Mines, which in turn is in its own sales agreement with another privately held Perth-based company, Minjar Gold. 

Once complete, DC Mines will become a subsidiary of Anova. As part of that process, Anova adopts the liability of DC Mines to pay Minjar up to $7m to settle asset transfers. 

Anova will also become liable for paying Minjar a 1% gold production royalty ($20/oz on a $2,000/oz price basis) capped at $18m. 

A 10:1 share consolidation by Anova will also form part of the deal, once the company becomes Lustre Metals. 

Ultimately, Anova will issue DC Mines shareholders 1.25 Anova shares (on a post-consolidation basis) for each DC share held. 

A maximum of 237.5m new Anova shares can be issued under the agreement; securities will “issued to entities associated with Mingyan Wang and Edward Rigg,” whom the company highlights are both on Anova’s board of directors. 

Anova must acquire all necessary compliance permits in order for the deal to trigger. 

Nevermind which way the wind blows 

“With the team we have built, we can shift focus between WA and Nevada as the seasons dictate and maintain a steady pace of development at both projects,” Anova chief Amanda Buckingham said. 

“The [WA] Projects are located in a highly prospective and active mining district, the Murchison Region of Western Australia, which has demonstrated time and again its prospectivity for high grade gold and base metals discoveries.”

“With an average drilling depth of only 42 metres the Projects are essentially unexplored at depth.”

Even accounting for relative illiquidity, Anova's share price performance has remained comparatively robust over the last six months