What does $71BN Franco Nevada’s deal next door mean for BMG?

$71BN Franco Nevada just did a deal with Minerals 260…

… Next door to our Investment BMG Resources (ASX: BMG).

The same Minerals 260 that in its own announcement showed that the mineralisation is open to the west, which heads directly into BMG’s ground…

Franco Nevada invested $50M directly into Minerals 260, but the standout to us was the $170M royalty deal.

We see that royalty deal as explicit backing from Franco Nevada, to get Minerals 260’s project developed and into production (so they can see a return on that $170M royalty).

The big kicker for our Investment BMG is that now, Minerals 260 has a major shareholder (and royalty holder) who will want to see them go as hard as possible on exploration.

Franco Nevada’s royalty means that every time Minerals 260 make a new discovery and add to the 4.5M ounce gold resource - their royalty pays more in dividends than initially assumed…

Today’s deal reminds us of a podcast we listened to where Pierre Lassonde (mining royalty & a Franco Nevada founder) talk about how they turned a $2M royalty into over $1BN.

Pierre tells the story of how the first royalty Franco Nevada did was on Barrick’s Goldstrike deposit in Nevada, USA.

When that deal was done initially, the deposit was small BUT had plenty of exploration upside.

Decades later, with a lot of exploration luck its the centrepiece asset of the $113BN Barrick’s gold business.

(Barrick picked up the Goldstrike asset in 1986 when it had 680,000 ounces of gold. 25+ years on and that project has produced over 44M ounces of gold)

Here is Pierre Lassonde talking about the experience here:

(Watch Video - this link takes you to the section where he talks about the Goldstrike story)

We think that Franco Nevada coming into this part of WA will mean Minerals 260 are encouraged to turn over every single rock possible in and around its deposit…

Which we hope, means BMG’s ground surrounding Minerals 260’s deposit just got a lot more valuable…

(source)

An update on BMG’s 518k ounce Abercromby project

BMG also holds 100% of the Abercromby project in WA which has:

• 518k ounce gold resource (gold is currently at ~A$6,850 per ounce - drilling to grow this resource starts in ~8 weeks)
• In the Famous WA “Northern Goldfields” gold region hosting many, multi-million ounce gold deposits.
• Sitting within trucking distance to two giant mills - with one mill owner planning to raise $200-300M via a ~$400M ASX listing and has publicly stated they are looking at “growth initiatives, and/or corporate transactions”. (and BMG already has a toll treatment MoU with them - more on this in a second)
• “Scoping study into a potential low-capex, fast payback mining proposal” due this quarter
• and the “moonshot” exploration theory - BMG says the project could host a similar style deposit to the $2.5BN, 2.1M ounce “Never Never” discovery made by Spartan Resources…

BMG expects to be drilling this asset “on or about 24 February 2026”.

(source)

BMG will be drilling in and around the existing 518K ounce gold resource, where some of the previous holes have had some seriously strong hits:

(source)

Importantly though, BMG confirmed the diamond holes would test for extensions at depth - which IF they come in could add more weight to the whole “Never Never” style ductile gold exploration upside on the project.

For some context - “Never Never” was the 2.1M ounce discovery Spartan Resources made that led to its $2.5BN takeover only 2.5 years after discovery.

Here is where BMG is planning to drill relative to its resource - what we will be looking out for is if the gold extends at depth:

(source)

BMG also confirmed that some of the drill program would be going into testing extensions to the south of the existing resource.

So we could see BMG add size/scale to its already large resource after this round of drilling is done.

Here is an image we marked up showing where those targets to the south sit:

(source)

BMG is also building out its team

BMG has been fairly quiet for the past few years - apart from a few small drilling programs, BMG’s assets haven't really had systematic exploration on them for years.

Inside the last four weeks BMG has added Ben Pollard as CEO.

Ben’s been with BMG since 2020 as exploration manager, 25+ years experience working for the majors in this part of WA…

And most importantly a track record of delivering value for shareholders of small companies.

Since 2010 Ben founded or led small caps that acquired unloved gold assets, progressed them and realised value by selling them to bigger companies:

• Fulcrum Resources - acquired the Cue Gold Project from Harmony Gold and subsequently sold it to Westgold Resources Ltd.
• Egan Street Resources - acquired the Rothsay Gold Project and subsequently sold to Silver Lake Resources Ltd.
• Klondyke Gold Project - acquired from Jupiter Mines Ltd and subsequently sold to Calidus Resources Ltd.

It was also nice to see Ben exercise 25M performance rights at 2c (for ~$500K) a few days after coming on as CEO (management buying is always a good sign):

(source)

Then today, BMG added Gareth Gareth McArthur as General Manager, Project Development as it gears up for project delivery at its Abercromby Gold Project, WA

And interestingly, Gareth’s performance rights are tied to BMG’s share price trading above 5c per share AND the “Commencement by the Company of mining operations at the Abercromby Gold Project by 31 December 2027”...

(fingers crossed Ben and Gareth can make it happen)

(source)

What’s next for BMG?

🔄 Drilling to commence at Abercromby

BMG expects drilling to start at Abercromby “on or about 24 February” - which is tomorrow.

This will be 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)

Here are the milestones we will be tracking:

🔲 Drilling started

🔲 Assay results

🔲 Resource upgrade

🔄 Scoping study for the Abercromby resource

BMG also has a “Scoping study into a potential low-capex, fast payback mining proposal” due this quarter on its 518k ounce gold resource at Abercromby.

We are hoping to see the results from this fairly soon.

We note there is a previous study on the project from 2024 using a gold price of A$3,500 per ounce that showed ~$150M in cashflow over a 14 quarters (~3 years).

We are hoping to see a material upgrade to those numbers now with gold trading at ~$7,300 per ounce.

We also note that was on just 120K ounces of production - IF BMG finds more gold OR brings more of its resource into the mine plan then the numbers could increase again…

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

In the recent presentation BMG put out, they plan to run geophysics and have it completed before finalising drill targets for Q2 this year (source)