Ramelius Resources expands stake in Spartan Resources

Company News

by Glenn Dyer

Ramelius Resources (ASX:RMS) continues its patient expansion in the WA gold industry, putting a medium-sized boot on smaller rival Spartan Resources (ASX:SPR).

In a move this week, Ramelius revealed it had taken an 8.9% stake in Spartan but added that it has "no current intention to acquire control or make a takeover" of the smaller Spartan.

The news of the Ramelius stake saw Spartan shares fall more than 1% as punters took the "no current intention" statement to heart.

That doesn’t rule out a future move on Spartan and its gold prospects, which are nicely adjacent to Ramelius mines and processing hub around Mount Magnet in WA.

And while Ramelius shares fell 1.4% on Thursday, punters should remember Ramelius’s recent form.

It and rival Westgold dueled briefly for control of Karora Resources, which saw Westgold win with a bid of just over $808 million to create a combined business with more than 400,000 ounces of production a year.

Before that, in November of last year, Westgold and Ramelius had talks about a possible combination that ended up going nowhere.

Spartan is in a similar value zone, with a market cap of $978 million after an $80 million issue earlier this year.

Ramelius has a market value of $2.13 billion, so it can easily afford to swallow Spartan, especially with $446 million in cash and gold left on the books after the Spartan raid, which saw it grab 98.5 million shares.

Spartan is currently developing the Dalgaranga gold project in the same region of the WA goldfields as Ramelius. Dalgaranga is located 65 km northwest of Mount Magnet in WA, meaning there are significant geographical synergies for the two companies.

Dalgaranga was placed on care and maintenance in late 2022 after producing 72,000 ounces of gold that year. In February last year, Spartan revealed an 18-month exploration and possible development plan for the prospect and managed to prove up further reserves before making a major strike earlier this year called Pepper.

The Pepper prospect is within the Dalgaranga area, extending 647.67 meters down-hole and just 90 meters away from the Never Never prospect, with a series of new high-grade intersections there. Pepper appears to be a high-grade lode at depth.

Earlier this month, Spartan reported a "new deepest intercept at Pepper of 30.79 meters at 12.12 grams of gold per tonne," while Never Never reported "19.67 meters at 19.43 grams of gold per tonne from 765.33 meters down-hole, including 3.74 meters at 62.98 grams per tonne." Included in the Pepper intersection was 3.47 meters at 92.19 grams per tonne.

Spartan said that updates for the Never Never and Sly Fox Gold Deposits, as well as maiden standalone mineral resource estimates (MREs) for the Four Pillars, West Winds, and Pepper Gold Prospects, will be completed as part of the scheduled mid-year market update for the Dalgaranga Gold Project.

In its June 11 statement, Spartan said it had a total mineral resource estimate of nearly 44 million tonnes with 2.472 million ounces at between 1 gram per tonne gold to 3.1 grams per tonne. These were at Dalgaranga, Mount Egerton, Yalgoo, and Glenburgh.

Mount Egerton and Glenburgh are in the Gascoyne region of the WA goldfields.

Dalgaranga is near Mount Magnet (including Pepper, Gilbey’s Complex, Sly Fox, Four Pillars, and West Winds), and Yalgoo is in the Murchison, also near Mount Magnet.

It’s obviously the closeness to its mining operations around Mt Magnet that makes Spartan attractive to Ramelius and CEO Mark Zeptner.

“Ramelius has an enviable portfolio with multi-stage operations and a development project that is underpinned by the long-life, low-cost Mount Magnet operation,” he said this week.

“We also have extensive greenfield exploration opportunities, and our investment into Spartan Resources provides us with a strategic addition to the portfolio.”

The two companies already share some services such as camp contracting and supply vehicles.

Ramelius’s raid will also flush out anyone else eyeing off Spartan.

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