Big name investors back gold developer Medallion with $6.5m as bullion hits record highs

Medallion Metals has pulled in $6.5m from institutional backers including Alkane and Lion Selection Group as gold’s bull run continues.

Gold developer Medallion has secured big name backers in a $6.5m raising. Pic: Getty Images

• Major gold names back $6.5m Medallion Metals raising; Alkane to grab 6.3% stake after tipping in $1m+

• Fundies Lion Selection Group and Lowell also among the institutional backers

• Supports bankable feasibility study at Ravensthorpe gold project, with FID due late 2025

ASX gold stalwart Alkane Resources (ASX:ALK), which owns the Tomingley mine and Boda discovery in New South Wales, is poised to grab a significant share of one of the most advanced standalone WA gold developers at a time of record gold prices.

Medallion Metals (ASX:MM8), which owns the 1.6Moz Au Eq Ravensthorpe gold project in WA, headed for a trading halt on Friday and emerged with $6.5m in fresh capital at 10c a share, a narrow discount of around 4.8% to its last traded price of 10c.

Giving MM8 pro-forma liquidity of $9.5m, it will see Alkane emerge with 6.3% of the junior's shares in a major vote of confidence for the junior gold development story. Alkane, already a large holder in MM8, is understood to have committed to subscribe to over $1m of the non-underwritten raising.

The narrow discount reflects the shift for gold stocks, which are catching significant market interest as prices scale all time highs. A dive in the US dollar saw investors pile into gold last Thursday, taking prices to within a whisker of US$2800/oz and clearing $4500/oz Australian for the first time in history.

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Canaccord Genuity led the placement, which also garnered the support of Hedley Widdup's Lion Selection Group (ASX:LSX), one of the best known backers of junior gold stocks in the Australian market, as well as John Forwood's Lowell Resources Fund (ASX:LRT), an existing holder, and a string of other Aussie and US institutions. LSX revealed it tipped $1m into the placement.

The raising price represents an 18.1% discount to its 10-day VWAP of 12.2c. MM8's stock was up 75% over the six months leading up to the raising as higher gold prices and key project developments at Ravensthorpe progressed.

BFS in the works

MM8 had $3.4m in the bank at December 31. But the placement has been pegged to support the completion of a bankable feasibility study, as well as progressing permitting related activities for the development of MM8's Ravensthorpe gold project, debt financing and offtake discussions, extensional and infill drilling, updated mineral resource estimates and general working capital.

Located on WA's South Coast, the project is one of the largest slated for development as a standalone mine in WA, boasting 1.6Moz in gold equivalent resources.

But the project has a secret weapon intended to smooth its path to development, wth Medallion entering an exclusivity deed with IGO (ASX:IGO) last year to repurpose its concentrator from the mature Forrestania nickel mines, which shut due to low prices and falling reserves.

That will provide a low capital pathway to production, with a study in December forecasting MM8 would produce 336,000oz of gold and 13,000t of copper over an initial 5.5-year mine life at all-in sustaining costs of $1845/oz with the copper credit.

That would cost just $73m to build, including mine establishment and process plant modifications, generating pre-tax cash flow of $498m at a gold price of $3615/oz and copper price of $5.54/lb – equivalent to around $90m per annum.

That gets even more impressive at $4000/oz gold an $6.15/lb copper – spot levels back in December – with pre-tax free cash flow of $637m. Plug in current gold prices and you'll be looking higher sill.

At the base case the project already attracted a pre-tax NPV and IRR of $329m and 129% respectively, up that to $429m and 169% at December's spot – a nine-month payback on the capital outlay.

Permitting is currently underway, with a federal EPBC Act process referral decision to direct the next step in the project's approvals timeline expected early this month.

In the meantime a 15km drill program is already advanced to expand the mine's resource inventory. An initial production inventory of 2.7Mt at 3.9g/t gold and 0.6% copper for 342,000oz gold and 16,000t contained copper represents just 44% of its sulphide resource.

That only extends to 330m deep, with the deepest hole drilled at the project cutting off at 415m. WA gold mines can typically extend for 1km or more below the surface.

Other upside could come through the development of the project's oxide and transitional resources of 10.3Mt at 1.6g/t Au (520,000oz) as well as the polymetallic Trilogy deposit (5.6Mt at 0.9g/t Au, 54.4g/t Ag, 1.2% Cu, 2.4% Pb and 1.4% Zn), with the future acquisition of the Cosmic Boy mill at Forrestania to open a pathway to developing small third-party gold deposits closer to the plant, which is located south of Southern Cross in WA's Yilgarn.

Medallion also made a string of tenement applications late last year between 50-100km from Cosmic Boy covering 32,000 hectares around the historic 1.4Moz Bounty mine and Parker Dome intrusion, around 173km from Ravensthorpe's Kundip mine.

Medallion already sees opportunities to leverage the Cosmic Boy infrastructure for future growth. Pic: MM8

FID timeline set

Subject to the completion of negotiations on Cosmic Boy and other Forrestania assets, Medallion is now placed to reach FID on Ravensthorpe by late 2025, with infill drilling, metallurgical test work and permitting advancing and preliminary BFS work already under way.

“Medallion emerges from this capital raising well-funded to accelerate the sulphide development strategy with the gold price at record levels," MM8 managing director Paul Bennett said.

"Recent drill results build confidence that tremendous value can be unlocked for Medallion shareholders by bringing Ravensthorpe resources together with Forrestania infrastructure.

"The Board thanks new and existing shareholders for their strong support of the capital raising. There is a strong pipeline of news and de-risking milestones to look forward to throughout 2025.”

Following its investment in Medallion, Lion Selection Group's Widdup described the $47m capped junior – up over 14% today – as "catalyst rich".

“Medallion has been previously overlooked by investors as they contemplated a stand-alone development due to some of the challenges that face all potential project developers. The option to acquire a ready-made processing facility, should it be exercised, would reduce the hurdles to gold production significantly as the need to permit, clear vegetation and raise money to build a process facility are negated," he said.

"In addition, Medallion’s underground mining inventory is an unchallenging portion of the total fresh rock resource, which is currently being infill drilled. We think Medallion has become a much lower risk development proposition and is also now catalyst rich. We are pleased to become shareholders and note that gold producer Alkane Resources has followed on from a previous investment in Medallion in this fund raising."

Originally published as Big name investors back gold developer Medallion with $6.5m as bullion hits record highs