Thomson Resources Ltd [ASX:TMZ] has agreed to buy Webbs and Conrad silver projects from Silver Mines Ltd [ASX:SVL] today.
Thomson Resources is a gold and tin explorer with projects in central New South Wales. Their main priority is the Harry Smith gold project located close to Narrandera but they also have the Yalgogrin Gold Field.
Silver Mines is a resources company whose focus is the Bowdens Silver Project, located near Mudgee, New South Wales.
What’s the deal?
The Webbs Silver Project and the Conrad Silver Project are both located in the New England fold belt in NSW and cover about 86km squared. Both are high-grade silver projects with Webbs having an existing resource base of 1.5 Mt at 345 g/t Au.
Source: Thomson Resources
In exchange for Conrad and Webbs, Silver Mines gets a 19% stake in Thomson Resources. Silver Mines Director Anthony McClure also joins the board of directors at TMZ.
‘The Webbs and Conrad projects represent high-quality assets that have been a lesser focus for Silver Mines given our primary focus has been on developing the Bowdens Silver Project in New South Wales.
‘The concentrated effort that Thomson Resources will be able to afford these highly prospective assets will be particularly interesting and it is a great outcome for Silver Mines to be able to maintain exposure to them via an equity interest in Thomson Resources.’
TMZ will raise $6 million through a share placement at 62 cents a share. They’ll be using the money to continue exploration on existing and new projects.
Thomson Resources Exec Chairman David Williams said:
‘With these acquisitions Thomson has added an additional layer of diversification to its existing high-quality exploration portfolio and with a focussed effort Thomson will be able to quickly move into becoming a silver producer.
‘Each project has a significant existing silver resource, and we are eager to commence our initial exploration program to add additionally ounces to the current resources.’
What could happen next?
Markets have certainly liked the deal with Thomson’s shares surging by 30% at time of writing. It could turn out to be a good diversification strategy considering silver spot prices are up 36% year-to-date and close to 110% since March.
Silver demand as a hedge could still go higher even with more lockdowns in Europe and the virus surging in the US as they head into winter, and central banks promising more stimulus to keep their economies afloat.
Rum Rebellion’s editor Dan Denning believes that silver’s rally is far from over. In fact, now might be the best time to add the precious metal to your investment portfolio.
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