Join our daily newsletter At The Bell to receive exclusive market insights
Dreadnought Resources (ASX:DRE) and Black Cat Syndicate (ASX:BC8) have jointly announced they’ll form a JV to mine DRE’s Star of Mangaroon; however, the news hasn’t been enough to overly excite shareholders in either camp.
Listen to the HotCopper podcast for in-depth discussions and insights on all the biggest headlines from throughout the week. On Spotify, Apple, and more.
To be fair, BC8 is already sitting on YTD returns of +88% and has climbed to a cap of nearly $775M so with those gains already locked in (as of early December), the market may be thinking this just further justifies that already impressive run.
The case of Dreadnought’s relatively subdued share price action on Tuesday may be a result of the same underlying theory: YTD returns for DRE are up nearly +160% YTD (also worth noting DRE has 5.6B shares on issue).
At any rate, under the arrangement of the DRE-BC8 JV, Star of Mangaroon (SOM) ore will be hereafter mined, then shipped off to a processing facility at BC8’s Paulsen’s Gold Operation (PGO). Black Cat will provide up to A$10M in funding to haul from the SOM open pit; pathways lie open to a 50/50 funding agreement.
Similarly, Black Cat and Dreadnought will share down the middle “surplus cashflow from the mining, haulage treatment and sale of gold produced at a 50/50 split for the first $80M then 70% Dreadnought, 30% Black Cat for any additional surplus cashflow beyond $80M.” Black Cat retains first right over tenements if it wishes to sell them.
For Dreadnought’s part, it can now start mining without needing to conduct any more funding – it’s probable shareholders would balk at any further dilution as the company heads towards 6B SOI – and DRE also noted the agreement does not pertain to underground or additional open pit gold not yet properly known.
“We are delighted to deliver this package of agreements with Black Cat Syndicate that will see Dreadnought producing cashflow from the high-grade Star of Mangaroon open pit once all approvals are received,” DRE chief Dean Tuck said.
DRE last traded at 3.1cps; BC8 at $1.06/sh.
Join the discussion: See what’s trending right now on HotCopper, Australia’s largest stock forum, and be part of the conversations that move the markets.
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.
