A crown jewell of WA’s gold mining sector has been acquired, and Leeuwin Metals (ASX: LM1) owns the exact type of deposit that is the key to unlocking extraordinary value out of Edna May’s 2.9Mt processing plant. Ore from Marda was last mined and transported to the plant for processing in 2023, via haulage roads and from accessible pits that could rapidly resume production. A major consolidation of WA gold assets is taking place as the state’s major miners and developers fight for synergies and seek to eliminate underutilisation. The relentless roll up of small deposits and large infrastructure that Forrestania Resources (ASX: FRS) has been executing over the past year has culminated in a $945 million developer with 6Mt of processing capacity across two WA plants. The battle over Vault Minerals (ASX: VAU) between Regis Resources (ASX: RRL) and Genesis Minerals (ASX: GMD) has hyperfixated the market on how much value can be created by fully utilising these mines, with GMD identifying up to $2 billion of synergies by combining the neighbouring Leonora and Laverton assets, resulting in RRL walking away this morning – leaving another gold major hungry for growth.
After storming onto LM1’s register with a 7.03% holding, FRS has now bought RMS’ stake to bring its total position to 10.37% – with this recent parcel taken at $0.2043/share, subject to the Edna May acquisition going through. With LM1 currently trading at $0.21/share and a bid potentially on the way, as well as a resource upgrade and high impact assays both being imminent, there is likely very limited downside in taking a position in LM1 during the near term. Its $22 million enterprise value implies $64/oz on a EV/Resource basis, which could drop to $44/oz if LM1’s imminent MRE update defines a resource of 500koz. This compares to the $130/oz that FRS has bid for ZNC and its 675koz at 1g/t Au resource, and with LM1’s Executive Chairman Chris Piggott holding 7.78% of the company – he is highly incentivised to drive a favourable outcome for shareholders.
This comes right as further investigations into Marda’s regional targets have revealed multiple significant intercepts that are at the Red Boomerang and Deception Hill prospects, both not included in the current MRE and with assays such as 24m at 1.79g/t Au from surface including 15m at 2.72g/t Au from 8m, 12m at 4.33g/t Au from 64m including 1m at 26.4g/t Au from 67m, and 10m at 2.41g/t Au from 50m including 1m at 15g/t Au from 51m.
The resource at Marda is composed of numerous high grade sections that include a 96.4koz at 1.52g/t Au core at Evanston, 87.7koz at 1.26g/t Au at Marda Central and 25.7koz at 1.56g/t Au at Golden Orb. Each of these prospects have been drilled extensively throughout the course of this year, so the MRE update currently in progress is likely to add a material level of ounces to the headline 342.3koz figure. Some of the standout assays from this year include Evanston’s 14m at 1.72g/t Au from 98m including 3m at 4.75g/t Au from 98m, and Golden Orb’s 11m at 1.4g/t Au from 176m including 4m at 3.35g/t Au from 178m, with assays from Marda Central also due in the next couple of weeks.
FRS managed to rule off a $310 million capital raising to fund the $200 million cash component and anticipated capex for both Edna May and Lake Johnston, on top of issuing $90 million of shares to RMS, taking its market cap at the offer price of $0.40/share to $945.7 million. It plans to commence processing at the plant halfway through 2027, and will supply it through a combination ore mined from its satellite deposits and 1.5Mt at 1.06g/t Au of stockpiles, the latter of which will likely be chewed through quickly as it ramps up to its nameplate capacity of 2.9Mt while FRS starts mining at its various deposits in the area. RMS acquired it in 2017 from Evolution Mining (ASX: EVN) for $90 million and basically plundered its easy to access resources, so FRS could be considered as having paid a relatively high price for the asset. However, that is just the price that had to be paid to acquire a ready to produce processing plant in the best gold mining region in the world at near all time high gold prices – and FRS is certainly acting with a sense of urgency to make its investment worthwhile. The facility’s AISC ranged from $1,500-$2,000/oz during the four years of production where Marda was a crucial source of mill feed, and while these costs may be slightly higher now – there should be a very healthy margin at the current $5,822/oz (US$4,100/oz) gold price.
Current gold price forecasts have been pared further over the past few weeks in preparation for a potentially sharper Fed tightening cycle later this year, but price forecasts from JP Morgan of US$4,300/oz this quarter and US$4,500/oz in the final quarter of 2026 are still extremely strong relative to the valuations of explorers like LM1 and the margins developers like FRS have to play with when considering acquisitions.
There are other processing options for Marda, and the development MOU with MEGA means LM1 will pursue other options in the event it does not get an attractive enough offer from FRS. In the event an alternative development strategy is pursued – there is also the enormous 6Mtpa KoTH mine 218km away, which is processing 1.1g/t ore and operating under 90% capacity, with its owner VAU currently undertaking an expansion to 8Mtpa – and GMD will want to make full use of the asset. This is the exact type of processing partner that MEGA likes to deal with, and our last article highlighted a recent venture with Everest Metals Corporation’s (ASX: EMC) that MEGA will operate and provide $18.6 million of financing towards.
FRS was able to acquire Edna May for the same reason LM1 was able to acquire Marda – RMS’ capital expenditure requirements were too large at its other projects, and it had to choose between funding a $300 million expansion at the mine or at its other key asset – Mt Magnet, while having a cash balance of $446.6 million and producing NPAT of $200.3 million at the time. RMS also bought $185.2 million of Spartan Resources (ASX: SPR) shares in 2024, which was followed by $270 million for the cash component of its merger in 2025, and at the same time it was progressing the development of the Rebecca-Roe project.
RMS shut down Edna May due to the enormous capex required to continue mining on site and the inability to source sufficient ore elsewhere, a problem that FRS has solved. Once the immediately available high-grade sections of Marda were mined out, RMS basically abandoned the project because it had already decided to put Edna May into care and maintenance. The assemblage of deposits that FRS has put together could be sufficient to fully utilise the asset, and the dedicated haulage routes to transport ore 191km from Marda down to Edna May that were established by RMS could very easily be reused – significantly increasing the project’s attractiveness.
The consistent spate of deals FRS has done since May last year can be seen over a timeline below, which has culminated in the creation of a company with two major assets that are going to be supplied by numerous regional deposits – of which LM1’s Marda would be a logical addition:
Source: FRS
The map of varying ore sources that FRS is planning to mine and transport to Edna May and Lake Johnston can be seen below. The company plans to supply Edna’s 1H27 launch with ore transported from its British Hill and Johnson Range deposits, as well as existing stockpiles at the mine. This will be followed Burracoppin, and then Mt Palmer, Mt Dimer, and Lady Lyla – before considering taking on the $300 million stage 3 cut back required to access the bulk of Edna’s 945koz of remaining resources:
Source: FRS
A plan view of the drill collar locations at Red Boomerang and Deception Hill can be seen below, with a total of 2.2km of drill confirmed mineralised trend that LM1 is about to drill, targeting both extensions along strike and at depth – as well as infill drilling to define a resource:
Source: LM1
The two prospects can be seen below in relation to the rest of Marda’s resources and in the context of the regional geology:
Source: LM1
This is certainly the most pivotal and exciting point in LM1’s journey with Marda, virtually every key catalyst that can increase an explorer’s valuation is on the company’s horizon – from an imminent resource upgrade, to active drilling and assays pending from both extending existing resources and targeting new discovery areas, a solid partner for rapidly pursuing near term production – and a potential takeover from a regional major.
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Disclaimer: This article is for informational and marketing purposes only, and does not constitute financial advice or a recommendation to invest. All opinions expressed are our own. We may receive fees or other forms of compensation in connection with the publication of this content, and may own shares in any of the mentioned companies. Please do your own research and seek professional advice before making any investment decisions.