SMS Innovative Mining Solutions is very pleased to announce that it has entered into a mining alliance with Genesis Minerals Pty Ltd to enable the development of the Ulysses West Open Pit, 30km south of Leonora. The Ulysses West Open Pit forms part of the broader Ulysses Gold Project.
Genesis Minerals Limited is a new growth story in the Western Australian Goldfields. Genesis holds 100% of two gold projects in WA’s premier mineral districts. The first being the Ulysses Project near Leonora and the second being the Viking Project located near Norseman. Genesis has significant growth potential, and aim to commence production in the 4th Quarter of 2016 from the Ulysses West deposit which is a high grade, simple open pit development. Genesis has also entered into a toll milling agreement with Paddington Gold Pty Ltd.
SMS has been working with Genesis Minerals Ltd for the last 6 months during the feasibility study which now demonstrates a technically and commercially viable open put project at Ulysses West. SMS look forward to now working with Genesis at the Ulysses West Gold Project and further developing potential opportunities within their operations.
Genesis and SMS Innovative Mining Pty Ltd have entered into a mining alliance agreement to initially develop and mine the Ulysses West open pit which will include haul road construction, mobilisation of equipment, site establishment, drill and blast, and load and haul of waste and ore.
SMS will also provide a mix of equity and debt funding to support the development of the initial open pit at Ulysses West, subject to GMD shareholder approval.
The initial project investment by SMS will consist of the subscription by SMS for shares in Genesis, at $0.025 per share, to the value of $2.5 million. Genesis will issue shares to SMS until the full satisfaction of invoiced amounts as per the mining schedule to an aggregate of $2.5 million. Once the aggregate amount of $2.5 million has been reached all further invoiced amounts will be treated as an interest free loan from SMS to Genesis (if required) which will continue to accrue until repaid out of cash flow generated by Genesis from gold sales.
SMS and Genesis will jointly investigate opportunities to develop other open pit mining operations (including the next phase of Ulysses) and generate further low risk cash flow for the parties.
The mining alliance remains subject to and conditional on:
- Genesis convening a general meeting by 30 October 2016 of its shareholders to approve the proposed issue of shares to SMS (or nominee) to give effect to the initial project investment and;
- all approvals from applicable government agencies (including the Western Australian Department of Minerals and Petroleum) being obtained in connection with the initial project.
Amongst the key benefits of entering into the mining alliance agreement are:
- the provision of a strong funding solution for the commencement of mining by the Company at the Ulysses West pit;
- the provision of support and expertise with a group with a strong track record in mining similar sized operations; and
- both parties jointly identifying and pursuing new project opportunities
The initial contract will be in the order of $5 million over a period of 4 months. Services to be provided by SMS include mobilisation, site establishment, haul road and mine infrastructure construction, load & haul / drill & blast of waste and ore material. The project will employ of workforce of 40 personnel at its peak. Mobilisation is expected to commence late August, with active mining operations to commence mid to late September 2016.
The Ulysses West Open Cut award is significant, if not the most significant in the company’s history. Firstly, we welcome a new gold fields based client into the business with significant growth potential; secondly the Mining Alliance model is a strategic move for the business and provides SMS a true partnership with an emerging gold producer. This award and strategic arrangement further stamps our position as the dominant mining services partner in the Western Australian Goldfields.
SMS are extremely excited to be working with Genesis, and this mining alliance underpins the next phase of SMS’s growth.
For the full announcement from GMD, please refer to the Genesis Minerals Ltd website. http://www.genesisminerals.com.au