$2BN MI6 just acquired ground next door to WAU

Our Investment WA Gold (ASX: WAU) just had its neighbour - $2BN MI6 buy out neighbouring blocks for $7M…

What does that mean for WAU which holds the ground MI6 itself says could host the extensions to its ~4.5M ounce gold deposit?

We think it just made WAU’s ground arguably more valuable than the ground MI6 acquired because:

1. MI6's own mineralisation trends into WAU's ground

As we have covered in prior articles, MI6’s 4.5Moz resource extends west - the direction of WAU’s tenements.

You can check that part form here: World’s largest precious metals royalty and streaming company has sidled up next door to WAU

(That image overlayed on the right is from Minerals 260, source, source)

So any extensions of MI6’s existing deposits could potentially run onto WAU’s ground, which is where things would certainly get interesting.

Here is another view using images MI6 put out with drill results:

(source)

1. MI6 may need WAU’s blocks to optimise its mine plan

We are not mining engineers but it feels like it would make sense for the owner of a 4.5M ounce gold deposit to own the ground surrounding that resource.

When you’re building an open-pit gold operation at this scale (MI6 has a 130Mt JORC Resource), pit shells, waste dumps, infrastructure footprints, haul roads and process water sources all need to be planned across a wide area.

MI6’s announcement explicitly flagged that the new Geko ground includes "prospective areas for process water sources to support development and operations".

This means that MI6 is now consciously thinking about the operational footprint, not just the resource.

If WAU’s blocks sit in the way of any of that planning (which it would appear that if they don’t already, that they probably will soon enough), then WAU has leverage.

(source)

1. WAU is the only remaining neighbour of significance

Yesterday’s deal means MI6 now own most of the region here.

WAU is now the only junior with ground in the area.

(source)

There’s of course no guarantee any deal happens at all, MI6 may decide it has consolidated enough, or WAU may decide to hold and explore the ground itself, this is just our read of the setup.

We called the consolidation in this area in a previous note

Check out that note here: World’s largest precious metals royalty and streaming company has sidled up next door to WAU

Back in February the world’s leading gold-focused royalty and streaming company, the $63BN Franco Nevada, did a $220M financing deal with Minerals 260.

(source)

We thought that deal was basically green lighting Minerals 260’s project to be developed and get into production.

Franco Nevada now has a $170M royalty and $50M in equity on the line for the deposit).

We said in our note that Franco Nevada would now:

1. Want to see the MI6’s project developed and in production, AND
   
   
2. Want MI6 to go as hard as possible on exploration to make the project produce gold well beyond its existing 4.5M ounce gold resource.

We think both of those factors make WAU’s ground more valuable:

1. Because WAU owns the ground immediately to the west of MI6’s 4.5M ounce gold deposit (so if MI6 is serious about developing a mine here it will want to have full control of the area around the deposit so it can build pit designs as optimally as possible)
   
   
2. Because WAU owns ground that would give MI6 more exploration upside…

Here is WAU’s ground surrounding Minerals 260’s deposit:

(source)

And more importantly here is WAU’s block which MI6 in its own announcements says could be where its 4.5M ounce gold deposit extends into:

(That image overlayed on the right is from Minerals 260, source, source)

WAU is also drilling its other 518k ounce gold project right now

WAU is also drilling its other WA gold project (Abercromby) where it has a 518K ounce gold resource right now.

WAU just released a scoping study for that project which returned $253M NPV from just $8m pre-production CAPEX.

That’s a 33x return on pre production investment.

And it's gold in Western Australia (WA) - the epicentre of gold and gold mining, on a granted Mining Lease.

Smart move while gold is at historical highs... build fast, produce gold, and sell gold ASAP.

(the study was based on a gold price of A$6,000/oz, compared to a spot price of A$6,700/oz).

That study was based on mining the projects existing, higher confidence indicated resources - just 114k ounces (~22%) of the total 518K ounce JORC resource estimate the project has.

Which we think WAU could grow even further - WAU is currently running a 10,000m drilling program - mainly targeting extensions at depth to its existing resource.

(these drill results should start coming in soon)

WAU’s working geological theory is that its project could host a Never Never style ductile gold system - where the grades of its resource get bigger as drilling goes deeper.

Never Never was the discovery Spartan Resources made in mid 2024 which led to a ~$2.5BN takeover by Ramelius Resources. (source)

It’s still early days for WAU, but with this program, WAU is lobbing a few holes down to depths of ~500m - IF any of those come in then it could make that exploration theory a lot more real.

Of course, this is mining exploration - there’s no guarantee that WAU will have success here - Never Never was a very lucky discovery and those are very hard to replicate.

(source)(source)

The previous drill results made us do a double-take - we think anything remotely close to those old results could bring a lot more market interest into WAU (beyond today’s Scoping Study):

(especially that first one 57.5m at 5.73g/t gold from just 80m)

(source)

Here is a quick overview of why we like WAU’s 518K ounce (for now) Abercromby project:

• Existing High-Grade Resource: The project already hosts a 518k ounce gold resource, which provides a strong valuation floor.
  
  
• Expansion Potential: There is significant "blue sky" upside, with management targeting a resource upgrade to over 1M ounces through upcoming drilling.
  
  
• "Never Never" Discovery Potential: Geologists believe the project could host a high-grade, ductile gold structure similar to the "Never Never" discovery (Spartan Resources), which saw a multi-billion dollar valuation surge.
  
  
• Toll Treatment Strategy: WAU has a non-binding MoU with a nearby mill (Wiluna Mining). This allows for a low-capex, fast-track pathway to production without the need to build a $100M+ processing plant.
  
  
• Granted Mining Leases: Unlike many junior explorers, the core resource is already on granted mining leases, significantly reducing the regulatory timeline to start production.
  
  
• NPV of $205-253M pre tax: This NPV comes from just an initial $8M start up capital requirement making it a much easier funding hurdle to overcome than most explorers/developers require.
  
  
• Tier-1 Location: Situated in the "Northern Goldfields" of Western Australia, it is surrounded by major mines and infrastructure owned by companies like Northern Star and Genesis Minerals.

(source)

What’s next for WAU?

🔄 Drilling at the 518k ounce Abercromby project

This is now the first time Abercromby has had a large (10,000m) drill program on it since the maiden resource on the project back in 2023. (source)

Drilling is happening right now. We are hoping to see WAU hit extensions to the existing resource.

Here are the milestones we will be tracking:

• ✅ Drilling started
• 🔲 Assay results
• 🔲 Resource upgrade

🔄 Geophysics on Bullabulling project (next door to Minerals 260)

In the recent presentation WAU put out, WAU said it plans to run geophysics and have it completed before finalising drill targets for Q2 this year (source).

🔄 Updates on Wiluna processing MoU

WAU has an MoU with the Wiluna processing plant operators to treat the ore from its project which sits nearby (~20km), well within trucking distance.

Progress on this to lock in a processing agreement will allow WAU to be able to confirm its processing plan.