Andromeda Metals Ltd (ASX: ADN) is on the cusp of ceding a substantial amount of share as part of the Drummond Gold Project. Its joint venture partner Evolution Mining Limited has elected to acquire as much as 80% stake in the project after meeting Stage 1 expenditure of $2 million over the past two years.
Drummond Gold Project development
After spending $2 million at the prospective gold project, Evolution Mining Limited is set to spend an additional $4 million over the next two years. The spending drive paves the way for it to be the sole holder of 80% stake in the project.
Under the terms of the agreement, EVN is to pay Andromeda $200,000 in cash, ten days after confirming it is ready to proceed to Stage 2 of the project. Considering the rate at which Evolution Mining has completed Stage 1 of the Drummond Gold Project signals high probability that the project possesses high-grade epithermal gold deposits.
Andromeda conceding control of the Drummond Gold Project comes at a time when it is pursuing two, exploration license as part of its Poochera and Camel Lake Projects. Awaiting the two licenses, the company has started planning for exploration activities, having already initiated drill hole planning. The company has also commenced discussion with key stakeholders at the project.
Exploration works come hot on the heels of a surface exploration sampling that identified the presence of halloysite of up to 99.6% purity. Buoyed by results at the Camel Lake projects, Andromeda has confirmed that it is also planning to undertake drilling operations at the Mount Hope Project believed to be rich in Kaolin resource.
The exploration works follow the signing of a string of sales agreement for the direct shipping of Halloysite-Kaolin product. The deal is for a total product of 405,000tpa will see Longyan Kaolin, which is the world’s leader in halloysite kaolin importing as much as 200,000tpa of the Direct Shipping Ore.
Another Chinese entity, Beihai Kaolin, has also signed a Letter of Intent for 200,000tpa of DSO. Japans Yamada Toskio Shoten has inked a deal for the remaining 5,000tpa to be used in the domestic high-value ceramics market. In a press release, Andromeda says all the customers have shown indication of purchasing the product at a price range of between AU$115 AND au$140/t CIF.
“Securing significant DSO off-take confirms strong and growing market demand for all three product forms of Carey’s Well halloysite-kaolin. All volume and market pricing information will be utilized in the Scoping Study, due for completion by the end of September 2019,” Andromeda in a statement.
Rover Gold Project sale
Separately, Andromeda has confirmed the inking of an agreement for the sale of its Rover Copper-Gold Project. The agreement with Westgold Resources is for a total cash consideration of $650,000. Completion of the sale will result in the consolidation of the Rover gold project, paving the way for Westgold to embark on an aggressive exploration drive across the district. Andromeda intends to use proceeds from the sale to advance its Poochera Halloysite Kaolin Project.