The market may be falling on Wednesday, but that hasn't stopped one ASX mining share from jumping today.
Let's find out what is getting investors excited about this miner.
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Which ASX mining share?
The miner that is catching the eye today is Mount Gibson Iron Ltd (ASX: MGX).
At the time of writing, the company's shares are up 10% to 33 cents.
This compares favourably to a decline of 0.9% by the ASX 200 index.
Why is Mount Gibson Iron jumping?
Interestingly, despite what its name might indicate, iron ore is not the reason for its strong rise today. Instead, it is the potential expansion into gold that has got investors excited.
This morning, Mount Gibson announced a binding conditional agreement with Australian gold producer Northern Star Resources Ltd (ASX: NST).
This will see it acquire Northern Star's 50% interest in the Central Tanami Project Joint Venture (CTPJV) in the Northern Territory, along with an extensive wholly-owned exploration landholding adjacent to the CTPJV.
The CTPJV is a 50:50 joint venture between Northern Star and ASX-listed gold explorer Tanami Gold NL (ASX: TAM) located approximately 650 kilometres northwest of Alice Springs and encompassing a total landholding of approximately 2,100 sqkm in the Tanami region.
On a 100% basis, the CTPJV has a reported mineral resource estimate of 13.8 Mt grading 3.6 g/t gold for 1.6 Moz of contained gold.
The ASX mining share notes that it provides it with an attractive near-term development project, building on its remote-site operating strengths, with the ability to fast track permitting and technical work to position for a potential development decision within the next 12-18 months.
How much will it cost?
According to the release, the consideration for the acquisition is $50 million cash payable on completion.
Commenting on the deal, Mount Gibson's chief executive officer, Peter Kerr, said:
This acquisition represents a compelling opportunity to enter the gold sector at an attractive price, with the sector having strong fundamentals. Involvement in the Central Tanami Gold Project provides Mount Gibson with an opportunity to leverage the success of its Koolan Island iron ore operation to establish the foundations of a gold production business.
Given the substantial work that has been undertaken on the project by the CTPJV to date, we intend to work with Tanami Gold to fast track technical studies to position the project for a development decision within the next 12-18 months. We have already commenced the Foreign Investment Review Board application process and look forward to progressing to completion in the coming months.
